Sen. Sherrod Brown has gone from a champion of Ohio-based Workhorse Group to a critic in the past week, chiding the Cincinnati-area electric cargo van manufacturer’s officials with “padding their own pockets” in the wake of an Enquirer investigation.
In March, Brown accused the U.S. Postal Service of “passing over” Workhorse for a massive $6 billion vehicle replacement contract to replace thousands of delivery trucks. Workhorse’s stock plummeted more than 70% after it was snubbed.
An Enquirer investigation revealed Workhorse executives and board members sold off more than $60 million worth of their shares before the company’s stock collapsed. It also revealed company officials had signs the contract negotiations were in trouble months before it was announced a rival would win the bid.
Through a spokesperson, Brown said companies like Workhorse should be creating jobs, not enriching executives.
“Senator Brown will always champion Ohio companies that make investments in Ohio workers. But, executives who make illegal trades will never be tolerated under any circumstances,” a spokesperson for the Ohio Democrat said. “He believes that all executives who run companies – including Workhorse – should be focused on creating jobs and investing in workers, not padding their own pockets.”
Brown’s office declined to discuss the ongoing investigation into Workhorse by the U.S. Securities and Exchange Commission – which is overseen by the Senate’s powerful Banking, Housing and Urban Affair Committee, which Brown chairs.
The SEC has declined to comment on “the existence or nonexistence of a possible investigation.” But a letter by the regulatory agency obtained and authenticated by The Enquirer confirms an unspecified investigation into Workhorse.
The senator also endorsed legislation to reform 10b5-1 trading plans that critics say whitewash questionable stock transactions by corporate insiders. Such plans permit corporate officials to arrange future trades to be executed months in advance, triggered by target dates, stock prices or other metrics. The plans are controversial because lax rules allow them to be easily changed and disclosure requirements are virtually nonexistent.
Workhorse officials said they believe executives and board members did nothing improper when they sold their stock and options through 10b5-1 plans. The company shook up its executive ranks a day after The Enquirer posted its story on the transactions.
The company and top executives are being sued by shareholders, accusing insiders of using the postal bid to inflate share prices so they could sell at a high price.
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