LMP Automotive

Kurta Law is investigating brokers who recommended that their clients purchase shares of LMP Automotive Holdings, Inc. This investment came with substantial risks that made it unsuitable for many investors. These risks appear in the prospectus, the SEC filing that companies use to disclose their business strategy and related risks prior to offering the securities for sale. Unsuitable investments violate FINRA Rule 2111 and Regulation Best Interest, and investors who incur losses may be able to recover via FINRA arbitration.

If your broker recommended that you invest in LMP Automotive Holdings, you may have a claim against the firm through FINRA arbitration.  FINRA arbitration offers a quicker and cheaper remedy for investors than suing in civil court. Contact (877) 600-0098 or email info@kurtalawfirm.com to speak to a securities attorney for free today.

What is LMP Automotive Holdings?

According to its prospectus, LMP Automotive Holdings, Inc., is an e-commerce and facilities-based platform for consumers who desire to buy, sell, and subscribe for or finance pre-owned and new automobiles.

Investors should also know that LMP Automotive Holdings registered as an emerging growth company, meaning that it can make limited disclosures in its prospectus. Less information generally means more risk.

LMP Automotive Holdings Stock

LMP Automotive Holdings (LMPX) investments involve a high degree of risk, according to the company’s prospectus. The company debuted at $16.00 per share and recently traded at $0.10 per share. This massive drop in value was not surprising, given the risks clearly disclosed in the company’s prospectus.

Risks Associated with LMP Automotive Holdings

Brokerage firms that approve an investment are required to understand the risks associated with an investment. Furthermore, brokers must accurately represent the risks associated with certain investments.

At the time of the prospectus, LMP Automotive Holdings had a history of net losses. Uncertainties related to the company’s limited historical operations could hinder its ability to anticipate and adapt to changes in revenues or expenses, which would materially and adversely affect its business, financial condition, operations, and value of an investment in its common stock. The prospectus indicated that the company expected to continue to incur losses. Losses could be incurred for several reasons including a decrease in demand for the company’s products and services, increased competition, weakness in the automotive industry, etc.

LMP Automotive Holdings intended to acquire other companies as part of its growth strategy. There are several risks related to these acquisitions including the diversion of management time and focus from business operations, employee retention, integration of administrative systems, potential liability and litigation for activities of the acquired company, and other factors that may have material and adverse effects on operating results.

The prospectus indicates that certain payments made in 2018 could be construed by the SEC as transaction-based compensation to an unregistered broker-dealer. The resulting remediation costs would be $771,102 plus accrued interest.

Other risks to the company included potential engagement of equity or debt financing to secure additional funds, global supply chain issues, competition from companies with significantly greater resources, changes in the automotive and transportation degree, inadequate insurance coverage, unsuccessful marketing and branding efforts, compliance with governmental laws and regulations, data privacy, failure to maintain a reputation of integrity, geographic concentration of business, intellectual property disputes, etc.

Risks concerning this offering and ownership of the company’s common stock included immediate and substantial dilution as a result of this offering, financial reporting internal controls ineffectiveness, potential failure to satisfy NASDAQ listing requirements, inaccurate estimates in the preparation of financial statements, etc.

ThinkEquity Underwriter

ThinkEquity served as the underwriter of LMP Automotive Holdings, Inc. Investors should know about this broker’s potential conflicts of interest. An underwriter should keep potentially overly risky investments from trading on the public stock market. But because underwriters make money by bringing new stocks to market, they may have a motivation to overlook certain risks.

What Can I Do If I Suffered Losses?

If you lose money due to your investment in LMP Automotive Holdings, consider reaching out to a Kurta Law securities attorney. Our securities attorneys have 5-star reviews on Google and a proven track record when it comes to securing fair settlements for our clients. Call (877) 600-0098 or email info@kurtalawfirm.com.