Bankrupt electric vehicle maker Lordstown Motors Corp. agreed to pay disgorgement of $25.5 million to settle charges from the Securities and Exchange Commission (SEC) over alleged materially false and misleading statements regarding its flagship truck.

Lordstown agreed to cease and desist from further violations in reaching settlement, the SEC announced in a press release Thursday. The disgorgement total will be deemed satisfied through payments by Lordstown and other defendants to resolve pending class actions against them, the agency added.

The settlement is pending bankruptcy court approval.

In a related administrative proceeding, Lordstown’s former auditor, Clark Schaefer Hackett and Co. (CSH), agreed to settle charges of alleged violations of auditor independence required by the SEC and Public Company Accounting Oversight Board. CSH agreed to pay more than $80,000 in civil penalties, disgorgement, and interest; be censured; cease and desist; and improve its policies and procedures.

The details: Lordstown was founded in 2019 and went public in 2020 through a merger with a special purpose acquisition company (SPAC), according to the SEC’s order.

During and after the merger, which raised $675 million from investors, Lordstown and its founder made materially false and misleading statements in SEC filings and other public statements, the agency alleged.

The statements claimed Lordstown would be “first to market” with an electric pickup truck for the commercial fleet and tens of thousands of pre-orders from commercial fleet customers, per the order.

The company and its founder “misrepresented the true nature of the pre-orders for the truck, whether Lordstown had access to the key parts it needed to make the truck, and when the company would be able to deliver the truck to customers,” the order stated.

CSH provided bookkeeping and financial statement services to Lordstown when it was a private entity but also audited the same financial statements in connection with Lordstown’s merger with the SPAC, per the SEC.

Compliance considerations: Within 120 days of its separate order, CSH must hire an independent consultant to review the firm’s audit, review, and quality control policies and procedures.

The consultant’s purpose is to “make recommendations for improvements to policies and procedures relating to the sufficiency, adequacy, design, implementation, and effectiveness of CSH’s current quality controls relating to educating and monitoring for compliance,” the order stated.

Lordstown and CSH did not respond to requests for comment. Both companies settled without admitting or denying the SEC’s findings.

Jeff Dale is Managing Editor, Editorial Projects and Analytics, at Compliance Week. He previously served as Compliance Week's Digital Editor and has worked as a copy editor at the Boston Herald and city editor at The Hour Publishing Co. in Norwalk, Conn.View full Profile

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