Lionel Selwood, Jr.

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26137 / September 27, 2024

Securities and Exchange Commission v. Lionel Selwood, Jr., No. 2:24-cv-08336 (C.D. Cal. filed September 27, 2024)

SEC Charges Former CEO of Romeo Power, Inc. for Misleading Investors

The Securities and Exchange Commission announced settled fraud charges against Lionel Selwood, Jr., the former CEO of Romeo Power, Inc., a Southern California-based company that built batteries for commercial electric vehicles. The SEC's complaint alleges that Selwood misled investors about a shortage of battery cells, the main component for the company's products.

According to the SEC's complaint, Romeo announced a merger with RMG Acquisition Corp., a special purpose acquisition company, or SPAC, in October 2020. The complaint alleges that an SEC filing related to the merger disclosed that a cell shortage or inability of suppliers to deliver sufficient cells could have a material adverse effect on the company's business prospects and financial condition. The complaint further alleges that before the merger closed, Selwood - who was responsible for the above risk disclosure made in the filing - knew or should have known a shortage had in fact developed and that Romeo's suppliers were not able to deliver enough cells for the company to meet its previously disclosed revenue projections.

The SEC's complaint additionally alleges that cell supplier issues became worse following the merger's close on December 29, 2020. According to the complaint, Selwood knew or should have known of the deteriorating cell supply and supplier issues, but in January 2021 signed an SEC filing that continued to provide the same materially false and misleading risk disclosure. As alleged by the complaint, on March 30, 2021, after Romeo announced that it was revising its 2021 revenue projection because of a shortfall in cell capacity industrywide, Romeo's stock price dropped approximately 19.7% on heavy trading volume.

The SEC's complaint, filed in the U.S. District Court for the Central District of California, charges Selwood with violating the antifraud provisions of Sections 17(a)(2) and (a)(3) of the Securities Act of 1933 and Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 thereunder. Without admitting or denying the SEC's allegations, Selwood consented to a permanent injunction, to pay a $150,000 civil penalty, and to be prohibited from serving as an officer or director of a publicly traded company for a period of three years. The settlement is subject to court approval.

The SEC's investigation was conducted by Roberto Tercero and William Fiske, with the assistance of Ruth Pinkel, and supervised by Marc Blau and Douglas Miller.