Jonathan Stempel

(Reuters) – A shareholder sued Vivian Automotive Inc alleging that the startup did not inform investors that its electric cars were too expensive. This led to unpopular price increases which it quickly reversed.

Charles Larry Crews, shareholder of Rivian claimed that Rivian failed to disclose how the R1S SUV/R1T pickup truck were priced so cheaply it required them to be raised soon after their initial public offering in November.

Crews stated that the increase would “tarnish Rivian’s reputation as trustworthy and transparent company” and could result in cancellation of large numbers of preorders of 55.400 dating back to 2018.

He described the rollback and an apology by Chief Executive R.J. Scaringe as a “futile effort at damage control.”

Rivian declined to respond immediately on Tuesday to our requests for comments.

After Irvine-based Rivian raised the R1S price from $70,000 to $84,500, and R1T to $67,500 to $79,500, the proposed class action was initiated.

Rivian reversed course two days later. He stated that pre-ordered customers would not have to pay more and customers who have cancelled orders may be able to reinstate their order.

Scaringe wrote to customers March 3: “It wasn’t right and we have broken your faith in Rivian.” Rivian pointed out inflation pressures as the reason for price increases.

Amazon (NASDAQ.com) went public on Nov. 10 at $78.00 per Share, raising approximately $12 billion. It is currently the biggest IPO in 2021.

After losing 37% in five previous trading days, its shares were closed at $42.43 Monday.

Crews claimed that he bought 35 Rivian Shares on their first trading day at $112.83 each. This is 45% more than the IPO price.

Jacob Walker, Jacob Walker’s lawyer said in an email that federal securities laws offer “a very strong remedy for investors” when key information is omitted from IPO documents.

Scaringe is among the more than 30 defendants in this lawsuit, along with lead IPO underwriters Goldman Sachs and JPMorgan Chase (NYSE) Morgan Stanley (NYSE:).

Crews, v Rivian Auto Inc, et. al., U.S. District Court Northern District of California No. 22-01433.