The Toner Class Action Lawsuit
On May 6, Lead Plaintiff Victor Toner filed a class action lawsuit in New York, arguing that Romeo made false and misleading claims about the supply of battery cells for its products, the number of suppliers it had, and its estimated earnings for 2021.
Toner is suing the company and its executives for violating the Securities Exchange Act. He is claiming that Romeo’s unlawful actions and omissions caused him and other shareholders massive losses and damages.
Industry-leading Energy Technology Company, Romeo
According to the class action complaint, Romeo was founded in 2016 with the aim of developing and producing lithium-ion battery modules and packs for commercial electric vehicles.
The company’s core product offering supports the battery electric vehicle medium-duty short-haul and heavy-duty long-haul trucking markets, as well as specialty trucking and buses.
In 2020, Romeo predicted $11 million in sales for the year, with $140 million expected for 2021. According to the claim, the company intended to boost sales through primary collaborations and close supply relationships with LG Chem, Samsung, Murata, and SK Innovation, which produce battery cells. At the same time, they are a key component in Romeo’s battery modules and packs.
Additionally, the defendants claimed that Romeo Power had the capacity and supply to satisfy end-user demand for its products and that it was not beholden to “any level of the value chain.” Plus, they claimed that Romeo’s supply was hedged, and they did not see any material challenges that might hinder the company’s growth.
However, as per the lawsuit, Romeo Power was experiencing a severe shortage of high-quality battery cells due to supply constraints, which was unknown to investors.
To sum it all up, Romeo Power only had two battery cell suppliers, not four. Also, possible future threats of supply disruption or shortage that the company had warned about had already occurred; they did not have enough battery cell inventory to meet end-user demand and scale up production in 2021. Finally, Romeo’s supply constraint was a material hindrance to the company’s revenue growth.
Investors learned the truth in March 2021, when Romeo Power issued a press release stating that a shortage of battery cells had disrupted the company’s production. Therefore, the company’s projected revenue for 2021 will be reduced by approximately 71-87 percent.
Toner is seeking to represent anyone who purchased Romeo Power securities between October 5, 2020, and March 30, 2021. He’s suing for violations of the Securities Exchange Act, and he seeks a jury trial, as well as a classification of the Class, damages, interest, and legal fees.
Editor’s Note on Romeo Power Class Action Lawsuit:
This article is published to inform you of the latest class action lawsuit filed against industry-leading energy technology company Romeo Power. The company allegedly lied about its supply chain to boost share prices, causing substantial financial damages to shareholders.
Case Name & No.: Toner v. Romeo Power Inc. (f/k/a RMG Acquisition Corp.), et al., Case No. 1:21-cv-04058, in the United States District Court Southern District of New York
Products/Services: Lithium-ion battery modules and packs for commercial electric vehicles
Allegations: The company allegedly lied about its supply chain to boost share prices, causing substantial financial damages to shareholders
What can you say about this issue? Have you purchased Romeo securities between October 5, 2020, and March 30, 2021? If so, do not hesitate to message us about it by clicking the ‘Contact Us’ button below. We would love to hear from you.
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