SEC Sues Previous CEO and Chairman of Lordstown Motors Corp. for Deceiving Investors

SEC fraud charges

The United States Securities and Exchange Commission has filed fraud charges, on a settled basis, in federal court against the former head of the now bankrupt automaker Lordstown Motors Corp, Stephen Scott Burns.  In its complaint, the SEC alleged that Burns materially mislead company investors regarding “pre-orders” for its electric truck called Endurance.

Specifically, in SEC filings and public statements, Burns made false statements about Lordstown’s business, which included the misrepresentation that the company had solid customer demand as shown by in excess of 100,000 nonbinding preorders from customers in the commercial fleet space, per the SEC’s court allegation.   The SEC further contends that Burn’s statements were materially misleading in that a majority of the preorders were not, in fact, tendered by customers in the commercial fleet area, but rather by other non-commercial fleet customers, thus falsely creating an unrealistic picture of demand for the company’s electric truck product.

The SEC charged Burns with a violation of the federal securities laws, in particular Sections 17(a)(2) and (3) of the Securities Act of 193, which are anti-fraud provisions.  Significantly, however, these sections do not require proof of the element of scienter (intent).  In other words, arguably negligent or reckless conduct on the part of Burns could serve as the factual and legal support for such a charge.  Experienced defense counsel will, where possible, attempt to negotiate with the SEC to obtain this lesser charge when there is a basis to argue that the defendant did not possesses the required intent to deceive, but rather was simply negligent, or even reckless (but not extremely reckless) in making the complained of representation.

Burns reached a settlement with the SEC where, with neither admitting nor denying the SEC’s allegations, he agreed on a consent basis to the entry of a permanent injunction, to pay a one-time civil penalty in the amount of $175,000.00, and to be prohibited from acting as an officer of director of a publicly traded company for a two year period.  The proposed settlement between the SEC and Burns is pending subject to court approval.

Are You Facing SEC Fraud Charges?

David Chase, Esq. is a SEC defense lawyer, a former Senior Counsel in the SEC Enforcement Division, and now represents those who have just received a SEC Subpoena or are under SEC investigation as a SEC defense attorney.  David represents clients internationally in SEC investigations, and routinely defends SEC inquiries concerning insider trading, stock manipulations and crypto fraud.  You may contact David toll-free at: 800-760-0912 or e-mail at: for a confidential consultation about your SEC situation, and you can also visit the Firm’s website to learn more about David’s extensive SEC experience at:

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