A shareholder lawsuit seeking class-action status filed late last month is the latest stumbling block for fledgling auto retailer LMP Automotive Holdings Inc., which has yet to announce financial results for its two most recent quarters and says it must restate financial statements for the three quarters prior to that.
Shareholder Chris Nguyen filed the federal lawsuit May 27 in the Southern District of Florida, alleging violations of federal securities laws and that LMP made false or misleading statements and failed to disclose adverse facts about its business.
LMP CEO Samer Tawfik and CFO Robert Bellaflores also were named as defendants.
The lawsuit came a little more than a week after LMP said it would have to restate financial statements for the first three quarters of 2021.
Those setbacks, along with earlier difficulties, have made for a rocky road for LMP, which had been a used-vehicle retailer and vehicle subscription service until buying its first franchised dealerships in 2021.
Tawfik, who had aspirations to roll up dozens of dealerships, expanded the company to eight franchised stores and four used-vehicle outlets and made several more acquisition deals that later faltered.
In February, LMP disclosed it planned to terminate seven pending purchases of 17 franchised dealerships it had under contract because it wasn’t able to obtain financing to pay for them.
The company also said it was exploring strategic options, including a sale of the company.
Tawfik did not respond last week to requests for comment on the lawsuit.
But in a regulatory filing on Friday, LMP, the company’s board of directors and defendants in the lawsuit denied the allegations and said they intended to “vigorously defend themselves.”
Nguyen’s suit said, “As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages.”
LMP’s stock price has plummeted in the past year. In 2021, the stock had traded above $20 a share. On Friday, June 3, it closed at $4.30.