Steve Burns, the ousted founder, president and CEO of bankrupt EV startup Lordstown Motors, has settled with the U.S. Securities and Exchange Commission over misleading investors about demand for the company’s flagship all-electric Endurance truck.
Burns was ordered to pay a civil penalty of $175,000 and cannot serve as an employee or director of a public company for two years, according to the agreement filed in the US District Court for the District of Columbia. Without admitting or denying the SEC’s allegations, Burns agreed to a permanent injunction, the fine and other terms in the settlement, according to the SEC.
The SEC charged Lordstown Motors in February 2024 with misleading investors about the sales prospects of the Endurance electric truck. The company agreed to pay $25.5 million. At the time, it was not clear that the SEC was also seeking Burns.
Lordstown Motors was established in April 2019 as an offshoot of Burns’ other company, Workhorse Group. The company went public the following year through a merger with a special-purpose buyout firm DiamondPeak Holdings Corp., with a market value of $1.6 billion. During and after the merger, Lordstown received $780 million from investors, according to the SEC.
The company was among a batch of EV startups that went public through mergers with white-cheque companies in 2020 and enjoyed skyrocketing share prices that soon came crashing back down as they tackled the challenge of making and selling electric vehicles. Lordstown Motors attracted GM’s attention and investment and even acquired the automaker’s 6.2 million-square-foot assembly plant in Lordstown, Ohio.
By June 2020, Lordstown was riding high after unveiling its Endurance electric pickup at a glitzy and politically-oriented ceremony featuring former Vice President Mike Pence, who spoke for 25 minutes about former President Trump’s policies on jobs and the manufacturing, China and the COVID-19 response.
Burns told the crowd that he had received 20,000 pre-orders, a number that would have locked in the entire first year of production if every customer who pre-ordered the truck followed through and bought the vehicle. Burns later said the company had received 100,000 non-binding pre-orders from commercial fleet customers.
Short seller Hindenburg Research disputed those claims, and eventually Burns, along with other executives, will step down by June 2021.
The SEC later investigated the allegations and said Lordstown Motors and Burns made misleading statements about the business because most of the pre-orders were not from commercial fleet customers, but from companies that did not manage fleets or intended to buy the truck for themselves. use. This, the SEC says, created an unrealistic and inaccurate depiction of demand for the truck from commercial fleet customers.
Lordstown continued on a rocky road even after Burns’ departure, eventually filing for Chapter 11 bankruptcy protection. In March, Lordstown Motors emerged from bankruptcy with a new name and an almost singular focus: continuing the lawsuit against iPhone maker Foxconn for allegedly “destroying the business of an American startup.” The company is now known as Nu Ride Inc.
Burns has also moved on since his resignation. In January, Burns launched a new company called LandX Motors.
