May 18, 2022

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Rivian has been sued for misleading investors about electric vehicle prices

Rivian has been sued for misleading investors about electric vehicle prices

March 8 (Reuters) – Rivian Automotive Co. (Rivno) A lawsuit was filed by a shareholder who claimed the startup failed to tell investors it had lowered the prices of its electric cars, leading to unpopular price increases that they quickly retracted.

In a complaint filed Monday in US District Court in San Francisco, shareholder Charles Larry Cruz said Rivian hid how its R1S SUV and R1T truck were so undervalued that it needed to raise prices shortly after their initial public offering in November. .

Crews said the increases would “tarnish Rivian’s reputation as a trustworthy and transparent company,” and risk canceling a large number of 55,400 pre-orders dating back to 2018.

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He described the pullback, including an apology from CEO RJ Scaringe, as a “futile attempt at damage control”.

Rivian did not immediately respond on Tuesday to requests for comment.

The proposed class action came after Irvine, California-based Rivian sparked a backlash from customers, including on social media, on March 1 by raising the price of the R1S to $84,500 from $70,000, and the price of the R1T to about 79 $500 out of $67,500.

Rivian retracted two days later, saying that customers with pre-orders won’t experience the higher prices, and customers who canceled can return them. Read more

“It was a mistake, and we broke your trust in Rivian,” Scaringe wrote to clients in a March 3 letter. Rivian pointed to inflationary pressures, which led to higher prices.

The company went public at $78.00 a share on November 10, raising nearly $12 billion in the world’s largest initial public offering of 2021. Read more

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Its shares closed at $42.43 on Monday, having lost 37% of their value in the previous five trading days.

Crews said it bought 35 shares of Rivian on the first day of trading at $112.83 a share, 45% above its IPO price.

In an email, his attorney Jacob Walker said federal securities laws provide a “very powerful remedy” for investors when companies ignore key facts from IPO materials.

The lawsuit features the names of more than 30 defendants, including Scaringe and lead underwriters of the IPO, Goldman Sachs. (GS.N), c. B. Morgan Chase (JPM.N) and Morgan Stanley (MS.N).

The case is Crews v Rivian Automotive Inc et al., US District Court, Northern District of California, No. 22-01433.

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(Jonathan Stemple reports) in New York. Editing by Bernadette Bohm and Leslie Adler

Our criteria: Thomson Reuters Trust Principles.