NEW YORK, Aug. 5, 2023 /PRNewswire/ — Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Electric Last Mile Solutions, Inc. (“Electric Last Mile” or the “Company”) (OTC: ELMSQ) and reminds investors of the August 14, 2023 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you suffered losses exceeding $100,000 investing in Electric Last Mile 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”) and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/ELMSQ.
There is no cost or obligation to you.
Faruqi & Faruqi is a leading minority and Woman-owned national securities law firm with offices in New York, Pennsylvania, California and Georgia.
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 court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Electric Last Mile’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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