Investors in Lordstown Motors Corp. (NASDAQ: RIDE, “Lordstown” or the “Company”) may have legal claims arising from conduct by the Company that has given rise to a class action lawsuit (discussed below).
The electric vehicle startup recently said in a regulatory filing with the Securities and Exchange Commission (“SEC”) that orders for its Endurance pickup are non-binding, sending its share price tumbling. Lordstown’s stock dropped as much as 7% after the Company clarified statements by company President Rich Schmidt on June 15, 2021 to the effect that the Company had a large book of binding orders. The Company stated: “Although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments.”
Previously, Company founder and former CEO Steve Burns left Lordstown after the board reportedly determined that he had overstated orders for the Endurance truck with claims of 100,000 pre-orders. This controversy is the subject of a class action lawsuit that has been filed in the United States District Court for the Northern District of Ohio on behalf of investors who purchased or otherwise acquired securities between August 3, 2020 and March 24, 2021, inclusive.
On March 17, 2021, after the market had closed, Lordstown disclosed that the Company had received an inquiry from the SEC regarding accounting issues. Following this disclosure, Lordstown’s stock price fell $2.08 per share on March 18, 2021, a decline of an additional 14%.
Shareholders of publicly-traded companies may have legal remedies in the event of violations of law that cause them losses, possibly including class action litigation and derivative actions. A class action is a legal device that allows one person, or several persons, commonly referred to as the named plaintiff(s) or representative plaintiff(s), to bring a lawsuit on behalf of a much larger group of persons, referred to as “the class.” Class actions serve to promote important public policy goals including providing a mechanism through which the smaller claims of many parties who have suffered some injury (typically small monetary damages) are combined together in a manner that makes bringing litigation economical.
A derivative action is a lawsuit in which a shareholder effectively steps into the shoes of a corporation to assert claims against officers, directors or third parties whose conduct may have harmed the corporation. To assert derivative claims, a shareholder typically must either first make a demand on the Board of a company to assert the claims, and have the litigation demand rejected, or plead facts in a complaint sufficient to show that demand on the Board would be a futile act.
The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in securities disputes in state and federal court, as well as in arbitration proceedings. Investors may contact us via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at firstname.lastname@example.org for a no-cost, confidential consultation.
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