SEC Charges Lordstown Motors With Misleading Investors About Demand for Electric Pickup Truck

SEC Charges Lordstown Motors with Misleading Investors about Company’s Flagship Electric Vehicle

The Securities and Exchange Commission today charged Lordstown Motors Corp. with misleading investors about the sales prospects of Lordstown’s flagship electric pickup truck, the Endurance. Lordstown, which filed for bankruptcy in 2023, went public by merging with a special purpose acquisition company (SPAC) in 2020.

According to the SEC’s settled order, Lordstown exaggerated the demand for the Endurance, claiming that the company had received more than 100,000 nonbinding “pre-orders” for the vehicle from commercial fleet customers when, in reality, most of the pre-orders came from companies that did not operate fleets or intend to buy the truck for their own use. The SEC’s order also found that Lordstown misrepresented the company’s timeline for delivering the Endurance by failing to account for production delays partially due to Lordstown’s inability to access many critical parts.

SEC in ‘Enforcement-Only Mode’ for Crypto, Commissioner Peirce Says at ETHDenver

U.S. Securities and Exchange (SEC) Commissioner Hester Peirce said the top U.S. investment watchdog is in an “enforcement-only mode” when it comes to crypto, underscoring the uphill battle the industry faces against a litigious SEC.

Speaking at ETHDenver Thursday, Peirce, the most crypto-friendly of the SEC’s five commissioners, bemoaned that a regulator needed to attend the annual gathering of crypto developers, investors and marketers focused on Ethereum, the number two blockchain behind bitcoin.

“What I reflect is the fact that you all are spending part of your brainpower,” wondering how to avoid getting sued, she said to the conference’s packed main stage. “If we had clearer rules you could focus on building.”

SEC’s Recordkeeping Fines Offer Lessons to Compliance Officers

One salient feature of this set of fines is the clear benefit of credit for cooperation and self-reporting of recordkeeping gaps. While generally the fines ranged from $8 million to $16.5 million, Huntington, the firm that self-reported compliance issues, was fined $1.25 million—a pronounced and meaningful difference in magnitude.

Two other attributes of these fines are worth highlighting as well. First, the involvement of senior staff in prohibited activity continues to draw the SEC’s ire. Additionally, several fines mentioned the use of both unapproved communications methods, or applications, as well as the use of personal devices.

Pig-Butchering Crypto Scams Netted More Than $75 Billion, New Study Finds

John Griffin, a finance professor at the University of Texas at Austin, and graduate student Kevin Mei gathered crypto addresses from more than 4,000 victims of the fraud, which has exploded in popularity since the pandemic. With blockchain tracing tools, they tracked the flow of funds from victims to scammers, who are largely based in Southeast Asia.

Over four years, from January 2020 to February 2024, the criminal networks moved more than $75 billion to crypto exchanges, said Griffin, who has written about fraud in financial markets. Some of the total could represent proceeds from other criminal activities, he said.

“These are large criminal organized networks, and they’re operating largely unscathed,” Griffin said in an interview.

The Percentage Of Corporate DOJ And SEC FCPA Enforcement Actions That Result From A Voluntary Disclosure

For at least 15 years the government has encouraged business organizations to voluntary disclosure conduct that may violate the Foreign Corrupt Practices Act.

But what do the numbers show? What percentage of DOJ and SEC enforcement actions are the result of a voluntary disclosure?

This post provides the answers.

SEC Overstepped Bounds in Kraken Lawsuit, State AGs Charge

A group of state attorneys general are arguing that the U.S. Securities and Exchange Commission exceeded its authority in suing the crypto exchange Kraken.

State law enforcement officials from Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota and Texas filed a joint amicus brief – or friend of the court filing – in the SEC’s suit against Kraken on Thursday, alongside a number of industry lobbyists and other participants.

NYAG Sues Meat Company for Its Net Zero Emissions Claims

It is not news that ESG has become a battleground issue, with prominent ESG efforts now facing an anti-ESG backlash. And while in the recent past institutional investors and advocacy groups tried to push publicly traded companies to establish their ESG credentials, the ESG-related litigation (such as it has been, so far at least) has primarily been filed not against ESG laggards, but rather against companies that have tried to promote their sustainability efforts and other climate-friendly measures.

In the latest example of litigation against a company in connection with its efforts to promote its ESG qualifications, the New York Attorney General, Letitia James has filed a fraud lawsuit in New York state court against the U.S. subsidiary of JBS, a Brazil-based meat and poultry producer, alleging that its sustainability claims and its publicized goal of achieving net zero greenhouse gas emissions by 2040 misled consumers. A copy of the New York Attorney General’s February 28, 2024, press release about the lawsuit can be found here. The NYAG’s February 28, 2024, complaint can be found here.