Lordstown Motors receives two subpoenas
Lordstown Motors, an Ohio company under scrutiny over the number of orders it claimed it had for the electric trucks that it wants to produce, acknowledged receiving two subpoenas from federal regulators and that prosecutors in New York have opened an investigation.
The Securities and Exchange Commission asked in a pair of subpoenas for documents related to the company’s merger with DiamondPeak, a special purpose acquisition company.
Special purpose acquisition companies, or SPACs, have gained prominence this year as a quick route to becoming publicly traded and listing shares on an exchange.
SPACs can cut up to 75% off the time it takes for a company to get its stock trading on an exchange, versus the traditional process of an initial public offering. SPACs can also make it easier to get prospective buyers on board. Companies going the SPAC route often feel more license to highlight projections for big growth they’re expecting in the future, for example. In a traditional IPO, the company is limited to listing its past performance, which may not be a great selling point for young startups that typically fail to put up big profits or revenue.
That dynamic is playing out as Lordstown’s operations come under increasing scrutiny, which it was partially shielded from when it went public through a SPAC.
Last month, Lordstown acknowledged that it had no firm orders for its vehicles days after its president said the company had enough of them to maintain production through 2022. (AP)