Investors Sue Workhorse Group Over Deceptive Contract Claims
American manufacturing company, Workhorse Group, was charged with a class action lawsuit by its investors due to alleged misleading, false claims made by the company.
The class action lawsuit was filed by investors against Workhorse Group in March 2021 in a California federal court.
According to the plaintiffs, the company has made misleading public statements that influenced the investors to finance the company.
However, the false claims and bid fell off, resulting in a significant loss of money for the investors.
The deceptive claims were related to Workhorse Group’s efforts to bid a contract with the U.S. Postal Service (USPS).
The complainants assert that two important figures from the Workhorse Group were interviewed by the media and released misleading statements.
The individuals in question were Duane Hughes, Workhorse Group’s CEO, and Steve Schrader, Workhorse Group’s Chief Financial Officer.
The class action lawsuit alleges that the statements implied that USPS has already decided to use an electric vehicle as the company’s delivery van.
Since Workhorse Group manufactures electric vehicles, the investors assumed that the contract was already a done deal.
However, it was later found out that these statements were just “hopes” by the company, and it was not guaranteed, which resulted in a major loss of investment when the share price fell, and the contract was not granted to the company.
The plaintiffs complain that Workhorse Group failed to inform its investors that USPS is unlikely to contract an electric vehicle since doing so would be too costly for USPS.
USPS was selecting a company to contract with for its future delivery vehicles.
Workhorse Group was one of the top four finalists being eyed by USPS for the ten-year contract. The contract is estimated to be worth $6.3 billion.
USPS announced on February 23, 2021, that it had awarded the ten-year contract to Oshkosh Defense.
After the announcement, Workhorse Group’s share price fell by more than 47%, which greatly affected its investors.
Multiple federal lawmakers took action to stop the deal and investigate the details surrounding the USPS contract.
In March 2021, a bill was presented in the U.S House Representative declaring the USPS next-generation fleet should be 75% zero-emission vehicles.
In the same month, the U.S. Securities and Exchange Commission (SEC) was requested by the U.S. Representative Tim Ryan to look into the contract.
According to him, a $54 million stock transaction occurred before USPS granted the contract to Oshkosh Defense.
Federal lawmakers have requested the U.S. President, Joe Biden, to pause the execution of the contract until the investigation is done.
They claim that USPS’ decision to award the contract to Oshkosh Defense is against the President’s executive order to change federal vehicles into electric vehicles.
The lawmakers assert that a full review should be conducted to ensure that the contract was awarded fairly and with no external influences.
They also add that the $6 billion contracts, which Congress will fund, pose serious consequences that can significantly impact the current climate crisis.
Editor’s Note on Workhorse Group USPS Contract Class Action Lawsuit:
This article is published to inform you of the latest class action lawsuit filed against Workhorse Group by its investors over alleged stock crash.
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