Electric-van maker Workhorse stock Dived 9% in morning trading after the report that it was being investigated by the Justice Department, documents showed,according to The Wall Street Journal.
The Justice Department has opened an investigation into electric-van startup Workhorse Inc.,according to documents reviewed by The Wall Street Journal.
The focus of the inquiry, which is being conducted by the U.S. attorney’s office in Manhattan, wasn’t revealed in the documents.
Spokesmen for the Manhattan U.S. attorney’s office and Workhorse declined to comment on the probe.
Also investigating Workhorse is the U.S. Securities and Exchange Commission, whose probe into the company was reported by the Journal in September. Workhorse has since said it had notified the SEC of misstatements it had made to safety regulators.
Shares in Workhorse closed at $7.22 Thursday, down 82% from an all-time high of $41.34 in February. Since late July, the company has installed new executive leadership, withdrawn financial guidance, stopped production and recalled vans that had already been delivered to customers.
Last year, electric-vehicle startups saw an influx of billions of dollars, many through mergers with special-purpose-acquisition companies, or SPACs. Workhorse’s roots as a public company go back to 2010, but its stock price benefited last year from the increased investor interest in EVs. Shares of Workhorse rocketed more than 2,000% between March 2020 and this past February.
Workhorse is the third electric-vehicle company known to have come under scrutiny from both federal prosecutors and securities regulators in the past 14 months.
This July, the Justice Department and the SEC filed securities-fraud charges against Trevor Milton, founder and former executive chairman of hydrogen-truck startup Nikola Corp.On Thursday,Nikola said it was putting aside $125 million ahead of a potential settlement with the SEC.
Nikola is “looking forward to resolving the outstanding issues relating to our founder and bringing that chapter to a close and maintaining our focus on delivering trucks to our customers,” Chief Executive Mark Russell said. Nikola said in a regulatory filing Thursday that it is committed to cooperating fully with the SEC and Justice Department investigations, which are ongoing.
A spokesman for Mr. Milton declined to comment.After he was charged in July, a spokesman for Mr. Milton’s lawyers said he was innocent and had been wrongly accused following a faulty investigation.
Earlier this year,the SEC and the Justice Department opened probes into Lordstown Motors Corp., a company in which Workhorse was an early investor.
Lordstown Motors has said it is committed to cooperating with any investigations.
Both Workhorse and Lordstown have been targeted by short sellers who say they are skeptical of the companies’ products and prospects for future business.
Based in Loveland, Ohio, Workhorse manufactures electric delivery vans that it aims to sell to commercial-fleet operators like United Parcel Service Inc.Workhorse had been a bidder on a new contract to make mail delivery trucks for the U.S. Postal Service, but lost the bid in February. The company challenged that decision in court but has since withdrawn its complaint.
On July 29, Workhorse said it was hiring Richard Dauch as chief executive and pulling its financial guidance for investors. Mr. Dauch had most recently served in the same role at Delphi Technologies PLC and oversaw its sale to BorgWarner Inc. Former Workhorse CEO Duane Hughes left the company by mutual agreement.
A few weeks later, Mr. Dauch opened an earnings call saying the company was revising designs for its flagship C-1000 vans in response to customer feedback that said they lacked payload capacity.
On Sept. 22, Workhorse said it was suspending deliveries of the C-1000 and recalling 41 that had already been delivered to customers. The company said that the vehicles needed more testing to comply with federal safety standards and that earlier statements related to their compliance made to federal regulators couldn’t be relied on.
Last month, the company disclosed that the chief financial officer, chief operating officer and general counsel who had been at the company with Mr. Hughes had left or would leave the company.
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