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Lucid Group Receives SEC Subpoena Over its High-Profile SPAC Deal to Launch its IPO

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【Summary】Newly listed Tesla challenger Lucid Group has received a subpoena from the U.S. Securities and Exchange Commission (SEC) over details surrounding its merger with special purpose acquisition company (SPAC) Churchill Capital Corp IV. California-based luxury electric vehicle startup Lucid launched its U.S. IPO after completing its merger with Churchill Capital Corp IV on July 23, 2021.

Eric Walz    Dec 06, 2021 8:45 AM PT
Lucid Group Receives SEC Subpoena Over its High-Profile SPAC Deal to Launch its IPO

Newly listed Tesla challenger Lucid Group has received a subpoena from the U.S. Securities and Exchange Commission (SEC) over details surrounding its merger with special purpose acquisition company (SPAC) Churchill Capital Corp IV. 

California-based luxury electric vehicle startup Lucid Motors launched its U.S. IPO after completing its merger with Churchill Capital Corp IV on July 23, 2021. The combined company now operates as Lucid Group, Inc.

Lucid Group raised $4.4 billion in its IPO, which gave the new combined company a pro-forma equity value of $24 billion.

The SPAC deal with Churchill Capital Corp included a private investment of $2.5 billion from Saudi Arabia's Public Investment Fund (PIF) and funds managed by BlackRock. The PIF fund previously invested $1 billion in Lucid Motors in Sept 2018.

Lucid received the subpoena from the SEC on Dec 3 requesting some documents related to an investigation surrounding its $24 billion SPAC merger. 

An SEC regulator asked Lucid for documents related to an investigation into its blank-check deal, joining a growing list of companies that have come under scrutiny for their mergers with shell companies as an easier way to launch an IPO and raise money from investors on Wall Street.

"The investigation appears to concern the business combination between the Churchill Capital Corp. IV) and Atieva, Inc. and certain projections and statements," Lucid wrote in its SEC filing. 

Lucid said its was cooperating fully with the SEC investigation.

Lucid's IPO in July came as Tesla stock climbed to record highs over the summer, which briefly pushed the company market cap to over $1 trillion. Tesla's soaring stock price in 2021 has also renewed investor interest in electric vehicles and related technologies, which led to other high profile mergers recently, including EV startup Fisker Inc, hydrogen-powered truck developer Nikola Corp and electric truck startup Lordstown Motors.

Both Nikola and Lordstown are also under investigation after their own high-profile IPOs.

Trevor Milton, the founder and former CEO of fuel cell truck startup Nikola Corp, was indicted over the summer for deceiving investors. He's facing criminal charges for making false and misleading statements about company and technology and truck development as its sought its IPO. 

Milton resigned as CEO in Sept 2020 over the allegations.

In July, prosecutors in New York charged Milton with two counts of securities fraud and one count of wire fraud over his statements about Nikola's products and technology.

In June Lordstown Motors' CEO Steve Burns and CFO Julio Rodriguez abruptly resigned from the company over similar claims. Their resignations come as the company's board reported conclusions from an internal investigation into claims made by well known short-seller Hindenburg Research, which accused Lordstown Motors of overstating the viability of its technology and misleading investors about production plans of its Endurance electric pickup truck.

Its important to note that Lucid has never been accused of misleading investors or overstating its EV technology.

The company's first vehicle, the Lucid Air sedan, has an EPA estimated range of over 500 miles, which reflects the company's advanced electric powertrain and battery technology.

Lucid is one of the most talked about EV startups to go public since Tesla in 2010 and the company's recent IPO is attracting investors looking for the next big thing in the EV sector. But the SEC investigation could scare some investors away, at least temporarily.

Lucid's stock is down nearly 10% on Monday to $42.87. The company's shares are listed on the Nasdaq under the symbol "LCID".

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