2021 has not been Workhorse’s year. First it lost its bid to develop the next generation of USPS trucks, then it sued over the decision, then suddenly dropped the suit in the face of a pending SEC investigation. And that’s before the company had to recall and cancel deliveries of its C-1000 van. Now, another investigation is looming on the troubled EV maker’s horizon: a probe from the Department of Justice.
The Wall Street Journal first discovered evidence of the investigation, which has since been officially disclosed by the company. While the Journal suspected the investigation may have ties to Workhorse’s early investment in fellow attempted EV maker Lordstown Motors, the official disclosure form the company claims it’s related to the USPS bid, per Reuters:
Electric van-maker Workhorse Group (WKHS.O) said on Monday it was being investigated by the U.S. Department of Justice and the U.S. Securities and Exchange Commission related to trading in the company’s securities leading up to the award of a U.S. Postal Service (USPS) contract.
While Workhorse was orally informed of the DoJ investigation on Nov. 5, the company had received SEC’s letters in mid-October and earlier this month seeking information related to the issue.
Workhorse disclosed the investigations in a regulatory filing, adding that it has not received any subpoena or request for documents from the DoJ.
With such limited information, it’s unclear exactly what the focus of the DOJ and SEC investigations will be. The company’s SEC disclosure does provide slightly more info, though it’s not much more telling:
On October 19 and November 1, 2021, the Company received letters from the SEC requesting that it voluntarily provide information relating to (a) the events and trading in its securities leading up to the announcement of the award of a contract by the U.S. Postal Service for the manufacture of a postal service vehicle fleet and (b) recognition of revenue, if any, related to purchases of vehicles by certain of the Company’s customers. On November 5, 2021, the Department of Justice (“DOJ”) orally informed the Company that it has a related open investigation covering the Company. The Company has not received any subpoena or other request for documents from the DOJ with respect to this investigation. The Company is cooperating with the SEC and DOJ investigations.
Given the focus on trades leading up to the USPS contract announcement, the SEC and DOJ may suspect some form of insider trading. The secondary focus on revenue from sales, however, could really be anything — we won’t know for sure until the investigation marches onward.