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Workhorse Group latest electric truck maker under SEC scrutiny

No details of investigation are public but ties to Lordstown Motors seem likely

The Workhorse C-1000 electric delivery van on display at the Advanced Clean Transportation Expo in Long Beach, California. (Photo: Alan Adler/FreightWaves)

Troubled electric delivery van manufacturer Workhorse Group is the subject of a Securities and Exchange Commission probe, the latest electric truck company drawing scrutiny over short seller allegations of shady business practices.

The investigation surfaced Wednesday as part of a report by Fuzzy Panda, which alleged Workhorse fabricated orders and improperly recognized revenue for trucks it had not delivered. Its report contained numerous other claims of shady business dealings by the Loveland, Ohio-based company.

A short seller borrows shares in a company betting the stock price will decline, which allows the short seller to repay the borrowed shares and pocket a profit.

Short seller stalkings 

The tactic has become common in the past 18 months as pre-revenue startups and young companies begin public trading through sponsorship by special purpose acquisition companies, essentially shell companies created specifically to find a merger target. The SEC began issuing guidance in April prompting SPACs to be more transparent.

Hindenburg Research, another short seller, has leveled allegations at troubled electric pickup truck startup Lordstown Motors Corp. (LMC) and earlier at startup electric truck maker Nikola Corp.

Nikola (NASDAQ: NKLA) parted ways with founder and CEO Trevor Milton last September following Hindenburg’s 67-page report. Milton was indicted July 29 on three federal fraud charges for allegedly trying to drive Nikola’s stock price higher for personal benefit. The SEC is also investigating Milton.

In both cases, Hindenburg unloaded on founders — Milton and Lordstown’s Steve Burns — who served in top leadership and held the largest number of outstanding shares in their respective companies.

Ties to Lordstown Motors?

Workhorse (NASDAQ: WKHS) is a little different than the typical short seller target, though 38% of its outstanding shares are shorted, according to The Wall Street Journal. Workhorse, founded by Burns in 2007, has been publicly traded since 2011 and became part of the Nasdaq since 2016.

Much of its public life has been spent mired in heavy debt due to borrowing from hedge funds. And it has had myriad manufacturing issues, preventing meaningful revenue and profits.

Workhorse, displaying a C-1000 electric van at the Advanced Clean Transportation Expo in Long Beach, California, declined to comment on the Fuzzy Panda report of the SEC investigation.

Its links to LMC (NASDAQ: RIDE), effectively a Workhorse spinoff started in November 2019 by Burns, who founded Workhorse in 2007 and resigned as CEO in February 2019. The SEC’s investigation of Lordstown may or may not have prompted SEC scrutiny.  The agency isn’t saying anything other than confirming to Fuzzy Panda that an investigation was ongoing as of June 30.

The SEC is investigating LMC over inflating preorders for its Endurance pickup truck. Separately, LMC in June filed a “notice of going concern” with the SEC, suggesting that without new money, it might be out of business within a year. It reiterated that notice in July.

Burns, who resigned as LMC CEO in June, also could be subject of a Justice Department probe of LMC. He orchestrated the licensing of Workhorse technology in exchange for a 10% stake in LMC as well as royalties on conversion of reservations for electric pickups Workhorse designed but lacked the money to manufacture.

Workhorse, which recently replaced CEO Duane Hughes with former Delphi Technologies CEO Rich Dauch, sold 72% of its LMC shares for about $79 million.

The Fuzzy Panda report contributed to Workhorse shares closing 6.83% lower Wednesday at $9.14.

Workhorse reviews electric van designs, distances itself from Lordstown Motors

Electric pickup truck maker Lordstown Motors taps former Icahn executive as CEO

Failure to launch: Workhorse Group ousts CEO as production delays escalate

Click for more FreightWaves articles by Alan Adler.


  1. Matt Maschinot

    Complete and total garbage!

    Short sellers who profit from making a stoke drop in value, write bogus reports about companies, claiming financial wrongdoing. The SEC is required to look into these claims. The short sellers them file Freedom of Information Act requests asking for documents regarding any investigations involving the company. Since the SEC is looking into the charges the short sell just made, the SEC responds with a form letter stating they can’t respond to the request because of an active investigation. But the investigation is into the claims made by the short seller.

    These form letters include a footnote, conveniently left out by Steve Mcgough (Fuzzy Panda) that says “this letter should not be interpreted as implying that the company had violated any laws”. Because that is EXACTLY what the short seller wants to imply!

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Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.