Robbins Geller Rudman & Dowd LLP announced that it has filed a class action lawsuit seeking to represent purchasers of Electric Last Mile Solutions, Inc. (NASDAQ: ELMSQ) common stock directly in the private investment in public equity (“PIPE”) offering conducted by Electric Last Mile on or about December 10, 2020 (the “PIPE Offering”). Captioned Levy v. Luo, No. 23-cv-00653 (D. Del.), the Electric Last Mile class action lawsuit charges certain of Electric Last Mile’s top executives, and Electric Last Mile’s former auditor, BDO USA, LLP, with violations of the Securities Exchange Act of 1934.
If you suffered substantial losses and wish to serve as lead plaintiff, please provide your information here:
https://www.rgrdlaw.com/cases-electric-last-mile-solutions-inc-class-action-lawsuit-elmsq.html
You can also contact attorney J.C. Sanchez of Robbins Geller by calling 800/449-4900 or via e-mail at jsanchez@rgrdlaw.com. Lead plaintiff motions for the Electric Last Mile class action lawsuit must be filed with the court no later than August 14, 2023.
CASE ALLEGATIONS: Electric Last Mile is a former commercial electric vehicle company that was focused on covering the “last mile” of deliveries, which has since filed for bankruptcy. Prior to its delisting, Electric Last Mile was a publicly traded company created through the June 25, 2021 merger of a privately held company called Electric Last Mile, Inc. and a publicly traded special purpose acquisition company (SPAC or blank-check company), then called Forum Merger III Corporation (“FIII”), with FIII serving as the surviving entity and changing its name to Electric Last Mile Solutions after the merger. The PIPE Offering was consummated in June 2021 in connection with the closing of the merger to raise additional funds to operate the post-merger, combined company Electric Last Mile and as a backstop to any potential shareholder redemption.
As the Electric Last Mile class action lawsuit alleges, defendants made false and/or misleading statements and/or failed to disclose that: (i) defendants Jason Luo, James Taylor, and other senior members of Electric Last Mile’s management had acquired Electric Last Mile common stock at substantial discounts to market value in transactions completed before the PIPE Offering; (ii) the difference between the fair market value of the Electric Last Mile common stock sold in the pre-PIPE Offering transactions and the amount actually paid had not been properly recorded as compensation expense by Electric Last Mile; (iii) the failure to record compensation expenses stemming from the pre-PIPE Offering transactions had the effect of substantially inflating Electric Last Mile’s year-end 2020 financial performance and the pro forma year-end 2020 financial performance of the combined company, thereby understating expenses, net loss, and shareholders’ deficit; (iv) as a result, Electric Last Mile’s historical financial statements could no longer be relied upon and would need to be restated; (v) the Electric Last Mile historical financial statements provided in proxy statements were not prepared in accordance with Generally Accepted Accounting Principles; and (vi) BDO had failed to follow applicable laws, rules, and regulations regarding auditor independence in auditing the Electric Last Mile historical financials provided in proxy statements.
On February 1, 2022, Electric Last Mile disclosed that an investigation by a special committee of the Board of Directors had discovered that Electric Last Mile’s senior management had acquired Electric Last Mile shares at “substantial discounts to market value” in certain equity transactions carried out at the end of 2020, and that the difference between the fair market value and the amount actually paid should have been, but was not, recorded as compensation. Electric Last Mile stated that it further had failed to “disclose any compensation associated with those transactions; or withhold or pay taxes in connection with that compensation.” As a result, the historical financial statements of Electric Last Mile and the post-merger company should not be relied upon and would need to be restated. Electric Last Mile also revealed that it expected to determine that material weaknesses existed in its internal controls over financial reporting and disclosure controls and procedures. Electric Last Mile also disclosed that both Luo and Taylor were leaving the company. On this news, the price of Electric Last Mile common stock declined more than 51%.
Then, on March 11, 2022, Electric Last Mile confirmed an ongoing U.S. Securities and Exchange Commission investigation and disclosed that it was withdrawing its previous financial guidance, was suffering production and launch delays for its vehicles, and that it would need to raise additional capital in order to continue its launch plans. On this news, the price of Electric Last Mile common stock declined more than 48%.
Finally, on or about June 13, 2022, Electric Last Mile announced that it was planning to liquidate through a Chapter 7 bankruptcy filing. As a result, Electric Last Mile stock sold in the PIPE Offering became virtually worthless, further damaging investors.
The plaintiff is represented by Robbins Geller, which has extensive experience prosecuting investor class actions including actions involving financial fraud. You can view a copy of the complaint by clicking here.
Robbins Geller has launched a dedicated SPAC Task Force to protect investors in blank check companies and seek redress for corporate malfeasance. Comprised of experienced litigators, investigators, and forensic accountants, the SPAC Task Force is dedicated to rooting out and prosecuting fraud on behalf of injured SPAC investors. The rise in blank check financing poses unique risks to investors. Robbins Geller’s SPAC Task Force represents the vanguard of ensuring integrity, honesty, and justice in this rapidly developing investment arena.
THE LEAD PLAINTIFF PROCESS: The Private Securities Litigation Reform Act of 1995 permits investors who purchased Electric Last Mile common stock directly in the PIPE Offering to seek appointment as lead plaintiff of the Electric Last Mile class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Electric Last Mile class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Electric Last Mile class action lawsuit. An investor’s ability to share in any potential future recovery of the Electric Last Mile class action lawsuit is not dependent upon serving as lead plaintiff.
ABOUT ROBBINS GELLER: Robbins Geller Rudman & Dowd LLP is one of the world’s leading complex class action firms representing plaintiffs in securities fraud cases. The Firm is ranked #1 on the most recent ISS Securities Class Action Services Top 50 Report for recovering more than $1.75 billion for investors in 2022 – the third year in a row Robbins Geller tops the list. And in those three years alone, Robbins Geller recovered nearly $5.3 billion for investors, more than double the amount recovered by any other plaintiffs’ firm. With 200 lawyers in 9 offices, Robbins Geller is one of the largest plaintiffs’ firms in the world and the Firm’s attorneys have obtained many of the largest securities class action recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig. Please visit the following page for more information:
https://www.rgrdlaw.com/services-litigation-securities-fraud.html
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Contacts
Robbins Geller Rudman & Dowd LLP
655 W. Broadway, Suite 1900, San Diego, CA 92101
J.C. Sanchez, 800-449-4900
jsanchez@rgrdlaw.com
