SEC v. LIONEL SELWOOD, JR., No. 2:24-cv-08336, Central District of California (Sept. 27, 2024) — Complaint

COMPLAINT
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RUTH C. PINKEL (Cal. Bar No. 164470)
Email:  [email protected]
ROBERTO TERCERO (Cal. Bar No. 143760)
Email:  [email protected]
WILLIAM S. FISKE (Cal. Bar No. 123071)
Email:  [email protected]
Attorneys for Plaintiff
Securities and Exchange Commission
Katharine E. Zoladz, Regional Director
Gary Y. Leung, Associate Regional Director
Brent Wilner, Associate Regional Director
Douglas M. Miller, Regional Trial Counsel
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
LIONEL SELWOOD, JR.,
Defendant.
    Case    No.
COMPLAINT
Plaintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDI
CTION AND VENUE
1.The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C.
§§ 77t(b), 77t(d)(1) & 77v(a), and Sections 21(
d)(1), 21(d)(3)(A), 21(e) and 27(a) of
the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a).
2:24-cv-08336

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2. Defendant Lionel Selwood, Jr. (“Selwood”) has, directly or indirectly,
made use of the means or instrumentalities of interstate commerce, of the mails, or of
the facilities of a national securities exchange in connection with the transactions,
acts, practices and courses of business alleged in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a),
because certain of the transactions, acts, practices and courses of conduct constituting
violations of the federal securities laws occurred within this district.  In addition,
venue is proper in this district because Defendant Selwood at times resided in this
district and he further served as the chief executive officer of Romeo Power, Inc.
(“Romeo Power”) and its predecessor Romeo Systems, Inc. (“Romeo Systems”),
which had its principal place of business in this district.
SUMMARY
4. This civil enforcement action concerns false and misleading statements
Selwood negligently made, or permitted to be made, in connection with a December
2020 merger between Romeo Systems and a special purpose acquisition company
(“SPAC”) called RMG Acquisition Corp. (“RMG”).  Selwood served as the CEO of
Romeo Systems, a company that manufactured battery packs and modules
(“batteries”) comprised of multiple battery cells (“cells”), marketed to commercial
electric vehicle manufacturers.
5. In public disclosures contained in RMG’s October 15, 2020 Form S-4
registration statement filed with the SEC, and in subsequent amendments (each of
which contained RMG’s proxy materials soliciting shareholder votes), Selwood and
Romeo Power made a projection it provided to RMG that the post-merger combined
entity (referred to herein as “Romeo”) would generate $139 million in revenue
in 2021.  RMG and Romeo Systems disclosed the projection to prospective Romeo
investors, and publicly to RMG’s and Romeo Systems’ shareholders who were to
vote on the proposed merger.

COMPLAINT
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6. The registration statement and proxy materials disclosed (1) a possible
but uncertain risk associated with the ability of suppliers to deliver sufficient numbers
of cells to Romeo, or the potential for a cell shortage to occur, and (2) if either risk
became a reality, it would have a material, adverse effect on the company’s business
prospects, financial condition, and operating results.
7. But contrary to these statements about the uncertainty of these risks,
Selwood knew or should have known that the suppliers were not able to deliver
enough cells and a cell shortage had already developed.  Specifically, in the months
before RMG’s last registration statement was filed, Selwood received substantial and
reliable information concerning the deteriorating market for cells, the suppliers’
inability to provide cells to the company, and the eventual shortage.  Selwood
received this information before RMG filed its last amendment to the registration
statement and shareholders were able to vote on the proposed merger transaction.
Consequently, the cell shortage directly impacted Romeo’s ability to meet the 2021
revenue projection.  Selwood negligently failed to disclose this information to RMG’s
shareholders, Romeo Systems’ shareholders or prospective investors before the
merger closed on December 29, 2020.
8. After the merger closed, the cell shortage and the suppliers’ ability to
provide cells to Romeo became more acute, and Selwood received substantial and
reliable information to that effect.  Nevertheless, Selwood authorized his signature to
be placed on a Form S-1 registration statement that Romeo filed with the SEC in
January 2021, for a subsequent offering of securities that contained the same
materially false and misleading conditional risk disclosures, except the offering did
not include the revenue projection that was contained in the registration statement and
proxy materials that were filed before the merger.
9. On or about March 30, 2021, approximately two months after the close
of the merger, Romeo finally issued a press release disclosing the shortage of cells
from its suppliers and its negative effect upon the company, including requiring the

COMPLAINT
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company to revise its revenue projection for 2021 down from $139 million to a range
of $18-$40 million.  After the announcement, Romeo’s stock price dropped
approximately 19.7% on heavy trading volume.
10. By creating an unrealistic and misleading depiction of the company’s
ability to manufacture batteries and to meet the revenue projection, Selwood failed to
exercise reasonable care in providing information contained in RMG’s registration
and proxy statement for the merger.  He also failed to exercise reasonable care in
providing the risk disclosures in Romeo’s post-merger registration statement.
11. Through his conduct, and as further detailed in this complaint, Selwood
violated the antifraud provisions of Section 17(a)(2) and (a)(3) of the Securities Act
and Section 14(a) of the Exchange Act, 15 U.S.C. § 78n, and Rule 14a-9 thereunder,
17 C.F.R. § 240.14a-9.
12. With this complaint, the SEC seeks a permanent injunction against
Selwood for his violations of the federal securities laws and to bar Selwood from
acting as an officer or director of a public issuer pursuant to Section 21(d)(5) of the
Exchange Act, 15 U.S.C. § 78u(d)(5).  The SEC further seeks to impose a civil
monetary penalty against Selwood pursuant to Section 20(d) of the Securities Act, 15
U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C.§ 78u(d)(3).
THE DEFENDANT
13. Lionel Selwood, Jr. (“Selwood”), age 35, was a resident of Florida and
California during the relevant period in this complaint.  Selwood was the CEO of
Romeo Systems from September 2020 to December 2020 and CEO of Romeo Power
from December 2020 to August 2021.  Previously, starting in February 2019, he was
president and general manager for North American operations of its predecessor
Romeo Systems.
RELATED ENTITIES
14. RMG Acquisition Corp. (“RMG”), was a Delaware corporation with its
principal place of business in New York, New York.  It was a SPAC, and its common

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stock was registered under Section 12(b) of the Exchange Act, 15 U.S.C. § 78l, and
traded on the NYSE under the ticker symbol “RMG.”  On October 5, 2020, RMG
announced that it had entered into a definitive merger agreement to acquire Romeo
Systems.  Upon the closing of the transaction on December 29, 2020, the combined
company’s name was changed to Romeo Power, Inc. (referred to herein as “Romeo”).
15. Romeo Power, Inc., formerly known as Romeo Systems, Inc. was a
Delaware corporation with its principal place of business in Vernon, California.
After the December 29, 2020, merger with RMG, the common stock of the combined
entity was registered under Section 12(b) of the Exchange Act [15 U.S.C. § 78l] and
traded on the NYSE under the ticker symbol “RMO.”  Romeo manufactured batteries
used to power commercial electric vehicles.
16. “Supplier One” was a foreign manufacturing conglomerate which
supplied Romeo Systems with battery cells.  Supplier One was the company’s main
cell supplier but only provided samples, until about September 2020, when Romeo
Systems sought to obtain significantly larger numbers of cells to meet its anticipated
production needs.
17. “Supplier Two” was a foreign manufacturing conglomerate which was
a supplier of sample amounts of cells to Romeo Systems until about September 2020,
when Romeo sought to establish it as its secondary supplier.
THE ALLEGATIONS
A. Romeo Systems and its Merger with RMG
18. Romeo Systems designed and manufactured lithium-ion batteries for
commercial electric vehicles from school buses to long-haul freight trucks.
19. The main component of Romeo Systems’ batteries were cells that store
electric power, representing 60-80% of the battery’s cost.
20. Romeo Systems bought the cells that it needed through purchase orders
that it submitted to its suppliers, but these purchase orders did not guarantee delivery
of the cells until the suppliers allocated the cells to the company (i.e., accepted the

COMPLAINT
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order) and was paid.
21. In March 2020, RMG approached Romeo Systems about a possible
merger.  Prior to the merger, Romeo Systems used Supplier One as its main supplier
of the cells that it used to manufacture batteries.
1. RMG’s due diligence, cell supply, and Romeo Systems’ 2021 revenue
projection
22. From April through July 2020, RMG conducted due diligence in
connection with the anticipated merger.  On July 21, 2020, RMG and Romeo Systems
signed a letter of intent.
23. During the due diligence process, RMG and its financial advisors asked
Romeo Systems executives and staff questions about the battery cells and its supply
arrangements to obtain them.  On or about August 17, 2020, Selwood told RMG and
its financial advisors that Romeo had a good relationship with its suppliers and
described Romeo as a “preferred customer” of Supplier One.
24. As part of the merger process, Romeo Systems provided RMG with a
five-year revenue projection, which included a revenue target of about $139 million
for the 2021 calendar year.  Selwood’s role in preparing the revenue projection was to
determine the probability that the revenue would materialize.
25. Cell supply and procurement were critical to Romeo’s business because
94% of its 2021 projected revenue was derived from battery sales.  Cells were the
main supply components of the batteries, and for Romeo to meet its 2021 $139
million revenue projection, it would have to secure at least 30 million cells from its
suppliers.
26. Under the forecast, Romeo planned to increase battery production in
March 2021 and planned to ramp up its manufacturing capacity in May 2021.
27. From approximately September 9, 2020 to December 18, 2020, RMG
and Romeo Systems conducted a private investment in public equity (or “PIPE”)
securities offering, in which investors could acquire RMG shares, a publicly traded

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company, through a private offering, in anticipation of the merger.  The $139 million
revenue projection was also included in the PIPE offering materials.
2. RMG’s proxy and registration statement for the merger transaction
and Romeo’s Form S-1 registration statement
28. On October 15, 2020, RMG filed with the SEC a Form S-4 registration
statement which included a proxy statement for the proposed merger, as well as a
notice of solicitation of written consent to Romeo stockholders, upon which Selwood
authorized his signature to be placed on, recommending the merger’s approval.
29. Following the October 15, 2020 Form S-4 filing, there were three
amendments, which were filed with the SEC on November 20, December 4, and
December 29, 2020.
30. Selwood reviewed the October 15, 2020 registration statement on Form
S-4 and the three amendments to it through December 29, 2020 all of which were
filed by RMG with SEC.  The S-4 registration statement and its amendments
contained a proxy statement, which included a notice of solicitation of written
consent to Romeo Systems stockholders, signed by Selwood, recommending the
merger’s approval.  Selwood was responsible for the content of the S-4 registration
statement and proxy statement about Romeo, including the discussion of risks and
Romeo Systems’ business.  Selwood also signed a form, attached to the S-4
registration statement as an exhibit, consenting to the use of his name in the proxy
statement as a person who would become a member of Romeo’s board of directors if
the merger was approved.
31. On January 19, 2021, after the merger was consummated, Romeo filed
with the SEC a Form S-1 registration statement.  This filing was signed by Selwood
as CEO, to register the sale of Romeo common stock and warrants held by certain
selling security holders, including about 720,000 shares that he owned.

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3. Statements in the relevant SEC filings concerning the risk and
existence of a cell shortage
32. The registration statement and proxy materials disclosed certain risks to
the business.
33. The RMG Form S-4 EMF, including the Proxy Statement, filed
December 29, 2020, included the two following statements regarding risks:
“We are dependent on our suppliers to fulfill our customers’
orders, and if we fail to manage our relationships effectively with,
or lose the services of, these suppliers and we cannot substitute
suitable alternative suppliers, our operations would be materially
adversely affected.  We rely on third-party suppliers for the
provision and development of many of the key components and
materials used in our battery modules and packs, such as cells,
electrical components, and enclosure materials.  The inability of
our suppliers to deliver necessary components of our battery
products at prices and volumes, performance and specifications
acceptable to us could have a material adverse effect on our
business, prospects, financial condition and operating results. . .”

“Increases in costs, disruption of supply or shortage of any of our
battery components, particularly cells, could harm our business.
From time to time, we may experience increases in the cost or a
sustained interruption in the supply or shortage of our
components.  Any such increase or supply interruption could
materially and negatively impact our business, prospects, financial
condition and operating results. . .”
34. The Romeo Form S-1 registration statement filed January 19, 2021,
included the same statements regarding risks.

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B. Selwood Had Previously Received Information Negatively Impacting the
Risks to Battery Production
35. After RMG and Romeo Systems signed the letter of intent and
continuing up until January 19, 2021, Selwood received substantial, reliable
information of an impending cell shortage, and ultimately that a shortage had
materialized.
36. Indeed, prior to the close of the merger, Selwood learned that Romeo’s
cell suppliers would not be able to deliver the volume of cells the company needed to
meet its requirements for the first half of Romeo’s 2021 revenue projection, and that
suppliers’ ability to deliver enough cells to meet Romeo’s needs for the second half
of the year was in serious doubt.
37. On August 4, 2020, Romeo Systems’ Cell Procurement Director texted
Selwood that he was concerned the company would not be able to secure the required
cell allocation from Supplier One because a prominent electric car manufacturer was
buying out the market.  He also told Selwood that Romeo Systems needed to secure a
second cell supplier because “[s]ingle sourcing is too dangerous,” and he was
concerned Supplier One might “betray us again.”
38. On September 21, 2020, Romeo Systems Chief Financial Officer
(“CFO”) again raised a potential supply issue with the Cell Procurement Director in
an email in which Selwood was copied.  The Cell Procurement Director responded
saying, “the shortage will become an issue based on the current trending and
circumstances.”  The Cell Procurement Director gave several reasons, including
increased competition for Supplier One’s cells and Supplier Two’s confirmation that
it would not be able to supply the cells Romeo needed for Romeo’s largest customer
in 2021 and 2022.
39. On November 2, 2020, the Cell Procurement Director texted Selwood
about a call he had with Supplier One, saying Supplier One was “a mess”, citing a
cell “shortage” and noting the company might not be able to provide Romeo with the

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cells it needed for its largest customer.
40. Shortly thereafter, the Cell Procurement Director drafted an email to
Supplier One and copied Selwood, beneath the subject line “Severe Shortage Issue.”
The email summarized a call with Supplier One, in which he was told the supplier’s
main factory was already operating at full capacity, “2021 1H [half] will be [a]
challenge to produce battery cells,” and that the supplier currently was unable to
allocate about three quarters of a small, existing order for cells Romeo Systems had
placed “due to the severity of shortage.”
41. On November 15, 2020, Selwood informed Romeo Systems’ CFO,
Chief Operating Officer, and Chief Technology Officer that although the company
was closing deals to sell batteries, “if we don’t have cells it doesn’t matter.”  Selwood
also said he was “personally negotiating with [Supplier One’s sales director of its
battery cell group] until we get a deal done.”
42. On December 9, 2020, the sales director of Supplier One’s battery group
spoke to Selwood and told him that it was very unlikely Supplier One would be able
to supply Romeo the 27 million cells that Selwood had listed in an email he sent
earlier that day.
43. On December 17, 2020, Selwood asked his Cell Procurement Director to
look into Supplier Two’s cell availability and noted that Supplier Two might have to
provide all the cells the company needed if Supplier One could not “pull a miracle.”
The Cell Procurement Director replied, “we cannot let [Supplier Two] know [that
Supplier One] is messed up on shortage.”
44. The same day, the Cell Procurement Director told Selwood that Supplier
Two could not provide all the cells that were needed but that it might be able to
provide 1.5 million cells per quarter beginning in the third quarter of 2021.  This
amount was substantially less than the approximately 26.3 million cells the company
needed for the second half of the year according to its forecast and potentially left the
company without any of the cells that it needed during the first two quarters of 2021

COMPLAINT
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(approximately 4.1 million cells).
45. On January 8, 2021, Romeo’s Cell Procurement Director copied
Selwood on his in response to an email from Romeo’s joint venture partner
requesting information regarding a lack of cell supply.  The Cell Procurement
Director stated “the [cell supply] shortage has not showed signs of improvement” and
that Supplier One “still shows tight [supply] in first half of 2021.”  While discussing
Supplier Two, he also referred to a “global shortage.”
46. On January 13, 2021, Supplier One sent Selwood and the Cell
Procurement Director an email, acknowledging Supplier One’s receipt of a Romeo
purchase order for 21 million cells, but saying the purchase order would only be used
for reference to see if allocation capacity existed in the third and fourth quarters
of 2021.  Supplier One added that they were “facing very tight supply due to market
dynamic[s].”
47. On January 19, 2021, during a conference call, Supplier One informed
Selwood and the Cell Procurement Director that other Supplier One customers with
long term agreements in place had increased their 2021 demand; that Supplier One
was not making cell allocation commitments to Romeo until further notice; that
Supplier One’s long-term agreement negotiations with Romeo were on hold; and that
no samples from Supplier One’s Chinese facility were available.
C. Selwood Negligently Made Materially False and Misleading Statements in
SEC Filings Regarding the Risks to Romeo’s Cell Supply
1. The materially false and misleading statements
48. No later than December 17, 2020, Selwood had substantial, reliable
information making it increasingly clear that Supplier One and Supplier Two were
each experiencing a shortage of the cells that the company needed to manufacture its
batteries.  Despite having this information, Selwood negligently made a series of
materially false and misleading statements in the following SEC filings regarding the
risks faced by the company’s cell suppliers and the existence of a cell shortage:
 

COMPLAINT
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a. RMG’s Form S-4 Registration Statement
DATE SOURCE MATERIALLY FALSE AND
MISLEADING STATEMENT
Filed with
the SEC on
December
29, 2020
RMG Form S-4 EMF,
including the Proxy
Statement
 “We are dependent on our suppliers to
fulfill our customers’ orders, and if we
fail to manage our relationships
effectively with, or lose the services of,
these suppliers and we cannot substitute
suitable alternative suppliers, our
operations would be materially
adversely affected.  We rely on third-
party suppliers for the provision and
development of many of the key
components and materials used in our
battery modules and packs, such as
cells, electrical components, and
enclosure materials.  The inability of
our suppliers to deliver necessary
components of our battery products at
prices and volumes, performance and
specifications acceptable to us could
have a material adverse effect on our
business, prospects, financial condition
and operating results. . .”

 “Increases in costs, disruption of supply
or shortage of any of our battery
components, particularly cells, could
harm our business.  From time to time,
we may experience increases in the cost
or a sustained interruption in the supply
or shortage of our components.  Any
such increase or supply interruption
could materially and negatively impact
our business, prospects, financial
condition and operatin
g results. . .”

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b. Romeo’s Form S-1 Registration Statement
DATE SOURCE MATERIALLY FALSE AND
MISLEADING STATEMENT
Filed with
the SEC on
January 19,
2021
Romeo Form S-1
Registration
Statement
 “We are dependent on our suppliers to
fulfill our customers’ orders, and if we
fail to manage our relationships
effectively with, or lose the services of,
these suppliers and we cannot substitute
suitable alternative suppliers, our
operations would be materially
adversely affected.  We rely on third-
party suppliers for the provision and
development of many of the key
components and materials used in our
battery modules and packs, such as
cells, electrical components, and
enclosure materials.  The inability of
our suppliers to deliver necessary
components of our battery products at
prices and volumes, performance and
specifications acceptable to us could
have a material adverse effect on our
business, prospects, financial condition
and operating results. . .”

 “Increases in costs, disruption of supply
or shortage of any of our battery
components, particularly cells, could
harm our business.  From time to time,
we may experience increases in the cost
or a sustained interruption in the supply
or shortage of our components.  Any
such increase or supply interruption
could materially and negatively impact
our business, prospects, financial
condition and operatin
g results. . .”
 

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2. The False and Misleading Statements Selwood Made in SEC Filings
Were Material
49. Each of the statements outlined in the tables above contained materially
false and misleading statements about the risks associated with Romeo’s ability to
procure and take possession of cells, manage its relationships with its suppliers, and
the existence of a cell shortage.
50. Specifically, each of the statements warned that Romeo’s business,
prospects, financial condition, and operating results “could” be materially and
adversely affected if its suppliers were not able to deliver the necessary components,
including cells, at acceptable prices and volumes.  The registration statements further
warned that a shortage of any of Romeo’s battery components, particularly cells,
“could” also harm its business, prospects, financial condition, and operating results.
51. These risk disclosures were materially false and misleading because, at
the time they were made and disseminated, Selwood had received substantial, reliable
information about the lack of cells Romeo would need to manufacture batteries due to
the cell shortage and the inability of the suppliers to fulfill the purchase orders that
were being discussed and ultimately submitted by Romeo after the merger, at least
not in the time or in the amounts needed for Romeo to meet the 2021 revenue
projection of $139 million.
52. A reasonable investor would have wanted to know the truth about
Romeo’s ability to procure cells for manufacturing batteries before investing and
would want to know about Romeo’s relationship with its cell suppliers because they
went to the heart of Romeo’s ability to generate revenue and consequently its
financial condition.
53. This disclosure ultimately was made on March 30, 2021, when Romeo
announced that it was revising its 2021 revenue expectations downward from $139
million, stating that “[a]s global demand for raw materials outpaces supply, Romeo
Power is subject to a significant shortfall in cell capacity industrywide, and now

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expects its revenue for 2021 to be in the range of $18-$40 million.”
54. That same day, Romeo held an earnings call with investors in which
Selwood further explained “the worldwide market for battery sales is experiencing a
significant shortage of certain high quality performance cells.  That shortage has
affected our ability to source adequate supplies of key battery cells critical to our
specialized, high density battery solutions.”  Selwood also disclosed that Romeo was
“making material updates to our production and revenue outlook for 2021” and that
“the impact to [Romeo’s] ability to generate revenue in 2021 is significant.”
55. Following these announcements, Romeo’s stock price dropped $2.04 per
share, or approximately 19.7%, to close at $8.33 per share on trading volume
approximately 7,250% higher than the previous day.
3. Selwood acted negligently
56. Selwood failed to act as a reasonable person would under the
circumstances.  The registration and proxy statement stated that Romeo’s financial
condition and business “could” be harmed by its suppliers’ inability to provide cells
or a cell shortage, when in fact, Selwood had substantial, reliable information that this
was already happening, and that Romeo’s business, financial condition, and operating
results would be harmed through 2021.  He nevertheless:  reviewed and signed off on
the disclosure contained in the SEC filings; signed the notice of solicitation in the
proxy statement/prospectus; consented to the inclusion of his name in the proxy
statement/prospectus as a director nominee; and authorized his signature to be placed
on the Form S-1 registration statement.
57. Selwood had a duty to provide prompt written notice of any
development known to him that would cause the proxy statement/prospectus to
contain materially false or misleading information.  Instead, Selwood failed to act
reasonably under the circumstances by not disclosing the substantial and reliable
information he had received and continued to receive, about Romeo Systems’
suppliers experiencing a shortage of cells and the negative impact this had on the

COMPLAINT
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company’s financial condition and prospects.
4. Selwood obtained property through the materially false and
misleading statements
58. Romeo Systems’ merger with RMG closed on December 29, 2020, and
provided the company with access to approximately $394 million in capital, including
$160 million that was raised from the PIPE offering.
59. Selwood also personally benefitted from the materially false and
misleading statements identified above in the Form S-4 registration statement and the
proxy statement, because the proxy statement was used to solicit votes to approve a
merger which, upon consummation of the transaction:  (i) placed him on the board of
directors of a public company; (ii) allowed him to convert his Romeo Systems stock
options into publicly tradeable common stock of Romeo; and (iii) allowed him to
exchange his existing Romeo Systems shares into publicly tradable Romeo stock.
D. Selwood’s Conduct Operated as a Fraud
60. In the time period leading up to the December 29, 2020 final amendment
to RMG’s S-4 registration statement, Selwood negligently failed to convey the
information he knew about a cell shortage to the public.  Instead, Selwood regularly
provided mostly positive updates about the company’s efforts to secure new business
and the size of its backlog, thereby negligently conveying a false impression of
Romeo’s condition and ability to operate as planned.  Selwood engaged in this
practice despite Romeo’s obligation to disclose any development known to Romeo
that would cause the proxy statement in the S-4 to contain materially false or
misleading information he knew or should have known would be used to solicit votes
in favor of the merger.
61. After the merger closed on December 29, 2020 through January 18,
2021, Selwood received additional information that the cell shortage had become
more acute and that cell suppliers were not able to provide cells timely or in the
quantities that Romeo needed.  Selwood, however, authorized his signature to be

COMPLAINT
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placed on the materially false and misleading S-1 registration statement on January
18, 2021.  He did not make any attempt to halt the offering that the S-1 covered or
correct the misleading risk factor disclosure, even after learning on January 19, 2021
that Supplier One had stopped cell allocation commitments until further notice and
placed its long-term negotiations with Romeo on hold.  Before the S-1 was declared
effective on January 26, 2021, Selwood continued his practice of negligently failing
to convey the information he knew or should have known about a cell shortage.
62. Selwood failed to act as a reasonable person would under the
circumstances.  At all times, Selwood, as CEO of a soon to be, and then, publicly
traded company, failed to use the degree and skill that a reasonable person preparing
documents for filing with the SEC would be expected to use.
FIRST CLAIM FOR RELIEF
Materially False or Misleading Statements
Violations of Securities Act Section 17(a)(2)
63. The SEC realleges and incorporates by reference paragraphs 1 through
62 above.
64. By engaging in the conduct described above, Defendant Selwood,
directly or indirectly, in the offer or sale of securities, and by the use of means or
instruments of transportation or communication in interstate commerce or by use of
the mails, obtained money or property by means of untrue statements of a material
fact or by omitting to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading.
65. By engaging in the conduct described above, Defendant Selwood
violated, and unless restrained and enjoined will continue to violate, Sections 17(a)(2)
of the Securities Act, 15 U.S.C. § 77q(a)(2).

COMPLAINT
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SECOND CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Securities Act Section 17(a)(3)
66. The SEC realleges and incorporates by reference paragraphs 1 through
62 above.
67. By engaging in the conduct described above, Defendant Selwood,
directly or indirectly, in the offer or sale of securities, and by the use of means or
instruments of transportation or communication in interstate commerce or by use of
the mails, engaged in transactions, practices, or courses of business which operated or
would operate as a fraud or deceit upon the purchaser.
68. By engaging in the conduct described above, Defendant Selwood
violated, and unless restrained and enjoined will continue to violate, Sections 17(a)(3)
of the Securities Act, 15 U.S.C. § 77q(a)(3).
THIRD CLAIM FOR RELIEF
Solicitation of Proxies in Violation of Rules and Regulations
Violations of Section 14(a) of the Exchange Act and
Rule 14a-9 Thereunder
69. The SEC realleges and incorporates by reference paragraphs 1 through
62 above.
70. By engaging in the conduct described above, Selwood, by use of the
mails, or the means of instrumentalities of interstate commerce or any facility of a
national securities exchange, solicited proxies without furnishing each person
solicited a proxy statement containing the information specified by the proxy rules,
and used proxy statement containing statements which, at the time and in light of the
circumstances under which they are made, were false or misleading with respect to a
material fact, or omitted to state material facts necessary to make the statement
therein not false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of a proxy for the same meeting or

COMPLAINT
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subject matter which has become false or misleading.
71. By engaging in the conduct above, Selwood violated, and unless
enjoined will continue to violate, Exchange Act Section 14(a), 15 U.S.C. § 78n(a),
and Rule 14a-9 thereunder, 17 C.F.R. § 240.14a-9.
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that Defendant Selwood
committed the alleged violations.
II.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendant Selwood, and his officers, agents,
servants, employees and attorneys, and those persons in active concert or
participation with any of them, who receive actual notice of the judgment by personal
service or otherwise, and each of them, from violating Section 17(a) of the Securities
Act, 15 U.S.C. §77q(a), and Section 14(a) of the Securities Exchange Act of 1934
(“Exchange Act”), 15 U.S.C. § 78n(a), and Rule 14a-9, 17 C.F.R. § 240.14a-9.
III.
Issue an order against Defendant Selwood, pursuant to Section 21(d)(5) of the
Exchange Act, 15 U.S.C. § 78u(d)(5), prohibiting him from acting as an officer or
director of any issuer that has a class of securities registered pursuant to Section 12 of
the Exchange Act, 15 U.S.C. § 781, or that is required to file reports pursuant to
Section 15(d) of the Exchange Act, 78 U.S.C. § 78o(d).
IV.
Order Defendant Selwood to pay a civil penalty under Section 20(d) of the
Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15
U.S.C. § 78u(d)(3).

COMPLAINT
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V.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.
VI.
Grant such other and further relief as this Court may determine to be just and
necessary.
Dated:  September 27, 2024
 /s/ Ruth C. Pinkel
RUTH C. PINKEL
Attorney for Plaintiff
Securities and Exchange Commission

COMPLAINT 1 

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RUTH C. PINKEL (Cal. Bar No. 164470) 
Email:  [email protected] 
ROBERTO TERCERO (Cal. Bar No. 143760) 
Email:  [email protected] 
WILLIAM S. FISKE (Cal. Bar No. 123071) 
Email:  [email protected] 

Attorneys for Plaintiff 
Securities and Exchange Commission 
Katharine E. Zoladz, Regional Director 
Gary Y. Leung, Associate Regional Director 
Brent Wilner, Associate Regional Director 
Douglas M. Miller, Regional Trial Counsel 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

LIONEL SELWOOD, JR., 

Defendant. 

 Case No. 

COMPLAINT 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b),

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. 

§§ 77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of

the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),

78u(d)(3)(A), 78u(e) & 78aa(a).

2:24-cv-08336

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COMPLAINT 2  

 

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2. Defendant Lionel Selwood, Jr. (“Selwood”) has, directly or indirectly, 

made use of the means or instrumentalities of interstate commerce, of the mails, or of 

the facilities of a national securities exchange in connection with the transactions, 

acts, practices and courses of business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a), 

because certain of the transactions, acts, practices and courses of conduct constituting 

violations of the federal securities laws occurred within this district.  In addition, 

venue is proper in this district because Defendant Selwood at times resided in this 

district and he further served as the chief executive officer of Romeo Power, Inc. 

(“Romeo Power”) and its predecessor Romeo Systems, Inc. (“Romeo Systems”), 

which had its principal place of business in this district. 

SUMMARY 

4. This civil enforcement action concerns false and misleading statements 

Selwood negligently made, or permitted to be made, in connection with a December 

2020 merger between Romeo Systems and a special purpose acquisition company 

(“SPAC”) called RMG Acquisition Corp. (“RMG”).  Selwood served as the CEO of 

Romeo Systems, a company that manufactured battery packs and modules 

(“batteries”) comprised of multiple battery cells (“cells”), marketed to commercial 

electric vehicle manufacturers.   

5. In public disclosures contained in RMG’s October 15, 2020 Form S-4 

registration statement filed with the SEC, and in subsequent amendments (each of 

which contained RMG’s proxy materials soliciting shareholder votes), Selwood and 

Romeo Power made a projection it provided to RMG that the post-merger combined 

entity (referred to herein as “Romeo”) would generate $139 million in revenue 

in 2021.  RMG and Romeo Systems disclosed the projection to prospective Romeo 

investors, and publicly to RMG’s and Romeo Systems’ shareholders who were to 

vote on the proposed merger.     

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6. The registration statement and proxy materials disclosed (1) a possible 

but uncertain risk associated with the ability of suppliers to deliver sufficient numbers 

of cells to Romeo, or the potential for a cell shortage to occur, and (2) if either risk 

became a reality, it would have a material, adverse effect on the company’s business 

prospects, financial condition, and operating results.   

7. But contrary to these statements about the uncertainty of these risks, 

Selwood knew or should have known that the suppliers were not able to deliver 

enough cells and a cell shortage had already developed.  Specifically, in the months 

before RMG’s last registration statement was filed, Selwood received substantial and 

reliable information concerning the deteriorating market for cells, the suppliers’ 

inability to provide cells to the company, and the eventual shortage.  Selwood 

received this information before RMG filed its last amendment to the registration 

statement and shareholders were able to vote on the proposed merger transaction.  

Consequently, the cell shortage directly impacted Romeo’s ability to meet the 2021 

revenue projection.  Selwood negligently failed to disclose this information to RMG’s 

shareholders, Romeo Systems’ shareholders or prospective investors before the 

merger closed on December 29, 2020. 

8. After the merger closed, the cell shortage and the suppliers’ ability to 

provide cells to Romeo became more acute, and Selwood received substantial and 

reliable information to that effect.  Nevertheless, Selwood authorized his signature to 

be placed on a Form S-1 registration statement that Romeo filed with the SEC in 

January 2021, for a subsequent offering of securities that contained the same 

materially false and misleading conditional risk disclosures, except the offering did 

not include the revenue projection that was contained in the registration statement and 

proxy materials that were filed before the merger. 

9. On or about March 30, 2021, approximately two months after the close 

of the merger, Romeo finally issued a press release disclosing the shortage of cells 

from its suppliers and its negative effect upon the company, including requiring the 

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COMPLAINT 4  

 

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company to revise its revenue projection for 2021 down from $139 million to a range 

of $18-$40 million.  After the announcement, Romeo’s stock price dropped 

approximately 19.7% on heavy trading volume.  

10. By creating an unrealistic and misleading depiction of the company’s 

ability to manufacture batteries and to meet the revenue projection, Selwood failed to 

exercise reasonable care in providing information contained in RMG’s registration 

and proxy statement for the merger.  He also failed to exercise reasonable care in 

providing the risk disclosures in Romeo’s post-merger registration statement.   

11. Through his conduct, and as further detailed in this complaint, Selwood 

violated the antifraud provisions of Section 17(a)(2) and (a)(3) of the Securities Act 

and Section 14(a) of the Exchange Act, 15 U.S.C. § 78n, and Rule 14a-9 thereunder, 

17 C.F.R. § 240.14a-9. 

12. With this complaint, the SEC seeks a permanent injunction against 

Selwood for his violations of the federal securities laws and to bar Selwood from 

acting as an officer or director of a public issuer pursuant to Section 21(d)(5) of the 

Exchange Act, 15 U.S.C. § 78u(d)(5).  The SEC further seeks to impose a civil 

monetary penalty against Selwood pursuant to Section 20(d) of the Securities Act, 15 

U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C.§ 78u(d)(3). 

THE DEFENDANT 

13. Lionel Selwood, Jr. (“Selwood”), age 35, was a resident of Florida and 

California during the relevant period in this complaint.  Selwood was the CEO of 

Romeo Systems from September 2020 to December 2020 and CEO of Romeo Power 

from December 2020 to August 2021.  Previously, starting in February 2019, he was 

president and general manager for North American operations of its predecessor 

Romeo Systems.   

RELATED ENTITIES 

14. RMG Acquisition Corp. (“RMG”), was a Delaware corporation with its 

principal place of business in New York, New York.  It was a SPAC, and its common 

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COMPLAINT 5  

 

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stock was registered under Section 12(b) of the Exchange Act, 15 U.S.C. § 78l, and 

traded on the NYSE under the ticker symbol “RMG.”  On October 5, 2020, RMG 

announced that it had entered into a definitive merger agreement to acquire Romeo 

Systems.  Upon the closing of the transaction on December 29, 2020, the combined 

company’s name was changed to Romeo Power, Inc. (referred to herein as “Romeo”). 

15. Romeo Power, Inc., formerly known as Romeo Systems, Inc. was a 

Delaware corporation with its principal place of business in Vernon, California.  

After the December 29, 2020, merger with RMG, the common stock of the combined 

entity was registered under Section 12(b) of the Exchange Act [15 U.S.C. § 78l] and 

traded on the NYSE under the ticker symbol “RMO.”  Romeo manufactured batteries 

used to power commercial electric vehicles.   

16. “Supplier One” was a foreign manufacturing conglomerate which 

supplied Romeo Systems with battery cells.  Supplier One was the company’s main 

cell supplier but only provided samples, until about September 2020, when Romeo 

Systems sought to obtain significantly larger numbers of cells to meet its anticipated 

production needs.  

17. “Supplier Two” was a foreign manufacturing conglomerate which was 

a supplier of sample amounts of cells to Romeo Systems until about September 2020, 

when Romeo sought to establish it as its secondary supplier.   

THE ALLEGATIONS 

A. Romeo Systems and its Merger with RMG 

18. Romeo Systems designed and manufactured lithium-ion batteries for 

commercial electric vehicles from school buses to long-haul freight trucks. 

19. The main component of Romeo Systems’ batteries were cells that store 

electric power, representing 60-80% of the battery’s cost. 

20. Romeo Systems bought the cells that it needed through purchase orders 

that it submitted to its suppliers, but these purchase orders did not guarantee delivery 

of the cells until the suppliers allocated the cells to the company (i.e., accepted the 

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COMPLAINT 6  

 

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order) and was paid. 

21. In March 2020, RMG approached Romeo Systems about a possible 

merger.  Prior to the merger, Romeo Systems used Supplier One as its main supplier 

of the cells that it used to manufacture batteries.  

1. RMG’s due diligence, cell supply, and Romeo Systems’ 2021 revenue 

projection     

22. From April through July 2020, RMG conducted due diligence in 

connection with the anticipated merger.  On July 21, 2020, RMG and Romeo Systems 

signed a letter of intent.   

23. During the due diligence process, RMG and its financial advisors asked 

Romeo Systems executives and staff questions about the battery cells and its supply 

arrangements to obtain them.  On or about August 17, 2020, Selwood told RMG and 

its financial advisors that Romeo had a good relationship with its suppliers and 

described Romeo as a “preferred customer” of Supplier One. 

24. As part of the merger process, Romeo Systems provided RMG with a 

five-year revenue projection, which included a revenue target of about $139 million 

for the 2021 calendar year.  Selwood’s role in preparing the revenue projection was to 

determine the probability that the revenue would materialize.   

25. Cell supply and procurement were critical to Romeo’s business because 

94% of its 2021 projected revenue was derived from battery sales.  Cells were the 

main supply components of the batteries, and for Romeo to meet its 2021 $139 

million revenue projection, it would have to secure at least 30 million cells from its 

suppliers.   

26. Under the forecast, Romeo planned to increase battery production in 

March 2021 and planned to ramp up its manufacturing capacity in May 2021.   

27. From approximately September 9, 2020 to December 18, 2020, RMG 

and Romeo Systems conducted a private investment in public equity (or “PIPE”) 

securities offering, in which investors could acquire RMG shares, a publicly traded 

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COMPLAINT 7  

 

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company, through a private offering, in anticipation of the merger.  The $139 million 

revenue projection was also included in the PIPE offering materials.   

2. RMG’s proxy and registration statement for the merger transaction 

and Romeo’s Form S-1 registration statement 

28. On October 15, 2020, RMG filed with the SEC a Form S-4 registration 

statement which included a proxy statement for the proposed merger, as well as a 

notice of solicitation of written consent to Romeo stockholders, upon which Selwood 

authorized his signature to be placed on, recommending the merger’s approval. 

29. Following the October 15, 2020 Form S-4 filing, there were three 

amendments, which were filed with the SEC on November 20, December 4, and 

December 29, 2020. 

30. Selwood reviewed the October 15, 2020 registration statement on Form 

S-4 and the three amendments to it through December 29, 2020 all of which were 

filed by RMG with SEC.  The S-4 registration statement and its amendments 

contained a proxy statement, which included a notice of solicitation of written 

consent to Romeo Systems stockholders, signed by Selwood, recommending the 

merger’s approval.  Selwood was responsible for the content of the S-4 registration 

statement and proxy statement about Romeo, including the discussion of risks and 

Romeo Systems’ business.  Selwood also signed a form, attached to the S-4 

registration statement as an exhibit, consenting to the use of his name in the proxy 

statement as a person who would become a member of Romeo’s board of directors if 

the merger was approved.  

31. On January 19, 2021, after the merger was consummated, Romeo filed 

with the SEC a Form S-1 registration statement.  This filing was signed by Selwood 

as CEO, to register the sale of Romeo common stock and warrants held by certain 

selling security holders, including about 720,000 shares that he owned.  

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COMPLAINT 8  

 

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3. Statements in the relevant SEC filings concerning the risk and 

existence of a cell shortage 

32. The registration statement and proxy materials disclosed certain risks to 

the business. 

33. The RMG Form S-4 EMF, including the Proxy Statement, filed 

December 29, 2020, included the two following statements regarding risks: 

“We are dependent on our suppliers to fulfill our customers’ 

orders, and if we fail to manage our relationships effectively with, 

or lose the services of, these suppliers and we cannot substitute 

suitable alternative suppliers, our operations would be materially 

adversely affected.  We rely on third-party suppliers for the 

provision and development of many of the key components and 

materials used in our battery modules and packs, such as cells, 

electrical components, and enclosure materials.  The inability of 

our suppliers to deliver necessary components of our battery 

products at prices and volumes, performance and specifications 

acceptable to us could have a material adverse effect on our 

business, prospects, financial condition and operating results. . .”  

 
“Increases in costs, disruption of supply or shortage of any of our 

battery components, particularly cells, could harm our business.  

From time to time, we may experience increases in the cost or a 

sustained interruption in the supply or shortage of our 

components.  Any such increase or supply interruption could 

materially and negatively impact our business, prospects, financial 

condition and operating results. . .” 

34. The Romeo Form S-1 registration statement filed January 19, 2021, 

included the same statements regarding risks. 

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COMPLAINT 9  

 

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B. Selwood Had Previously Received Information Negatively Impacting the 

Risks to Battery Production 

35. After RMG and Romeo Systems signed the letter of intent and 

continuing up until January 19, 2021, Selwood received substantial, reliable 

information of an impending cell shortage, and ultimately that a shortage had 

materialized. 

36. Indeed, prior to the close of the merger, Selwood learned that Romeo’s 

cell suppliers would not be able to deliver the volume of cells the company needed to 

meet its requirements for the first half of Romeo’s 2021 revenue projection, and that 

suppliers’ ability to deliver enough cells to meet Romeo’s needs for the second half 

of the year was in serious doubt. 

37. On August 4, 2020, Romeo Systems’ Cell Procurement Director texted 

Selwood that he was concerned the company would not be able to secure the required 

cell allocation from Supplier One because a prominent electric car manufacturer was 

buying out the market.  He also told Selwood that Romeo Systems needed to secure a 

second cell supplier because “[s]ingle sourcing is too dangerous,” and he was 

concerned Supplier One might “betray us again.”    

38. On September 21, 2020, Romeo Systems Chief Financial Officer 

(“CFO”) again raised a potential supply issue with the Cell Procurement Director in 

an email in which Selwood was copied.  The Cell Procurement Director responded 

saying, “the shortage will become an issue based on the current trending and 

circumstances.”  The Cell Procurement Director gave several reasons, including 

increased competition for Supplier One’s cells and Supplier Two’s confirmation that 

it would not be able to supply the cells Romeo needed for Romeo’s largest customer 

in 2021 and 2022.    

39. On November 2, 2020, the Cell Procurement Director texted Selwood 

about a call he had with Supplier One, saying Supplier One was “a mess”, citing a 

cell “shortage” and noting the company might not be able to provide Romeo with the 

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COMPLAINT 10  

 

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cells it needed for its largest customer.     

40. Shortly thereafter, the Cell Procurement Director drafted an email to 

Supplier One and copied Selwood, beneath the subject line “Severe Shortage Issue.”  

The email summarized a call with Supplier One, in which he was told the supplier’s 

main factory was already operating at full capacity, “2021 1H [half] will be [a] 

challenge to produce battery cells,” and that the supplier currently was unable to 

allocate about three quarters of a small, existing order for cells Romeo Systems had 

placed “due to the severity of shortage.” 

41. On November 15, 2020, Selwood informed Romeo Systems’ CFO, 

Chief Operating Officer, and Chief Technology Officer that although the company 

was closing deals to sell batteries, “if we don’t have cells it doesn’t matter.”  Selwood 

also said he was “personally negotiating with [Supplier One’s sales director of its 

battery cell group] until we get a deal done.”   

42. On December 9, 2020, the sales director of Supplier One’s battery group 

spoke to Selwood and told him that it was very unlikely Supplier One would be able 

to supply Romeo the 27 million cells that Selwood had listed in an email he sent 

earlier that day.  

43. On December 17, 2020, Selwood asked his Cell Procurement Director to 

look into Supplier Two’s cell availability and noted that Supplier Two might have to 

provide all the cells the company needed if Supplier One could not “pull a miracle.”  

The Cell Procurement Director replied, “we cannot let [Supplier Two] know [that 

Supplier One] is messed up on shortage.” 

44. The same day, the Cell Procurement Director told Selwood that Supplier 

Two could not provide all the cells that were needed but that it might be able to 

provide 1.5 million cells per quarter beginning in the third quarter of 2021.  This 

amount was substantially less than the approximately 26.3 million cells the company 

needed for the second half of the year according to its forecast and potentially left the 

company without any of the cells that it needed during the first two quarters of 2021 

Case 2:24-cv-08336     Document 1     Filed 09/27/24     Page 10 of 20   Page ID #:10



 

COMPLAINT 11  

 

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(approximately 4.1 million cells).   

45. On January 8, 2021, Romeo’s Cell Procurement Director copied 

Selwood on his in response to an email from Romeo’s joint venture partner 

requesting information regarding a lack of cell supply.  The Cell Procurement 

Director stated “the [cell supply] shortage has not showed signs of improvement” and 

that Supplier One “still shows tight [supply] in first half of 2021.”  While discussing 

Supplier Two, he also referred to a “global shortage.”   

46. On January 13, 2021, Supplier One sent Selwood and the Cell 

Procurement Director an email, acknowledging Supplier One’s receipt of a Romeo 

purchase order for 21 million cells, but saying the purchase order would only be used 

for reference to see if allocation capacity existed in the third and fourth quarters 

of 2021.  Supplier One added that they were “facing very tight supply due to market 

dynamic[s].”    

47. On January 19, 2021, during a conference call, Supplier One informed 

Selwood and the Cell Procurement Director that other Supplier One customers with 

long term agreements in place had increased their 2021 demand; that Supplier One 

was not making cell allocation commitments to Romeo until further notice; that 

Supplier One’s long-term agreement negotiations with Romeo were on hold; and that 

no samples from Supplier One’s Chinese facility were available.  

C. Selwood Negligently Made Materially False and Misleading Statements in 

SEC Filings Regarding the Risks to Romeo’s Cell Supply  

1. The materially false and misleading statements 

48. No later than December 17, 2020, Selwood had substantial, reliable 

information making it increasingly clear that Supplier One and Supplier Two were 

each experiencing a shortage of the cells that the company needed to manufacture its 

batteries.  Despite having this information, Selwood negligently made a series of 

materially false and misleading statements in the following SEC filings regarding the 

risks faced by the company’s cell suppliers and the existence of a cell shortage: 

Case 2:24-cv-08336     Document 1     Filed 09/27/24     Page 11 of 20   Page ID #:11



 

COMPLAINT 12  

 

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a. RMG’s Form S-4 Registration Statement 

DATE SOURCE MATERIALLY FALSE AND 
MISLEADING STATEMENT 

Filed with 
the SEC on 
December 
29, 2020 

RMG Form S-4 EMF, 
including the Proxy 
Statement 

 “We are dependent on our suppliers to 
fulfill our customers’ orders, and if we 
fail to manage our relationships 
effectively with, or lose the services of, 
these suppliers and we cannot substitute 
suitable alternative suppliers, our 
operations would be materially 
adversely affected.  We rely on third-
party suppliers for the provision and 
development of many of the key 
components and materials used in our 
battery modules and packs, such as 
cells, electrical components, and 
enclosure materials.  The inability of 
our suppliers to deliver necessary 
components of our battery products at 
prices and volumes, performance and 
specifications acceptable to us could 
have a material adverse effect on our 
business, prospects, financial condition 
and operating results. . .”  
 

 “Increases in costs, disruption of supply 
or shortage of any of our battery 
components, particularly cells, could 
harm our business.  From time to time, 
we may experience increases in the cost 
or a sustained interruption in the supply 
or shortage of our components.  Any 
such increase or supply interruption 
could materially and negatively impact 
our business, prospects, financial 
condition and operating results. . .” 

 

Case 2:24-cv-08336     Document 1     Filed 09/27/24     Page 12 of 20   Page ID #:12



 

COMPLAINT 13  

 

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b. Romeo’s Form S-1 Registration Statement 

DATE SOURCE MATERIALLY FALSE AND 
MISLEADING STATEMENT 

Filed with 
the SEC on 
January 19, 
2021 

Romeo Form S-1 
Registration 
Statement 

 “We are dependent on our suppliers to 
fulfill our customers’ orders, and if we 
fail to manage our relationships 
effectively with, or lose the services of, 
these suppliers and we cannot substitute 
suitable alternative suppliers, our 
operations would be materially 
adversely affected.  We rely on third-
party suppliers for the provision and 
development of many of the key 
components and materials used in our 
battery modules and packs, such as 
cells, electrical components, and 
enclosure materials.  The inability of 
our suppliers to deliver necessary 
components of our battery products at 
prices and volumes, performance and 
specifications acceptable to us could 
have a material adverse effect on our 
business, prospects, financial condition 
and operating results. . .”  
 

 “Increases in costs, disruption of supply 
or shortage of any of our battery 
components, particularly cells, could 
harm our business.  From time to time, 
we may experience increases in the cost 
or a sustained interruption in the supply 
or shortage of our components.  Any 
such increase or supply interruption 
could materially and negatively impact 
our business, prospects, financial 
condition and operating results. . .” 

 

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COMPLAINT 14  

 

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2. The False and Misleading Statements Selwood Made in SEC Filings 

Were Material 

49. Each of the statements outlined in the tables above contained materially 

false and misleading statements about the risks associated with Romeo’s ability to 

procure and take possession of cells, manage its relationships with its suppliers, and 

the existence of a cell shortage.  

50. Specifically, each of the statements warned that Romeo’s business, 

prospects, financial condition, and operating results “could” be materially and 

adversely affected if its suppliers were not able to deliver the necessary components, 

including cells, at acceptable prices and volumes.  The registration statements further 

warned that a shortage of any of Romeo’s battery components, particularly cells, 

“could” also harm its business, prospects, financial condition, and operating results.   

51. These risk disclosures were materially false and misleading because, at 

the time they were made and disseminated, Selwood had received substantial, reliable 

information about the lack of cells Romeo would need to manufacture batteries due to 

the cell shortage and the inability of the suppliers to fulfill the purchase orders that 

were being discussed and ultimately submitted by Romeo after the merger, at least 

not in the time or in the amounts needed for Romeo to meet the 2021 revenue 

projection of $139 million.   

52. A reasonable investor would have wanted to know the truth about 

Romeo’s ability to procure cells for manufacturing batteries before investing and 

would want to know about Romeo’s relationship with its cell suppliers because they 

went to the heart of Romeo’s ability to generate revenue and consequently its 

financial condition. 

53. This disclosure ultimately was made on March 30, 2021, when Romeo 

announced that it was revising its 2021 revenue expectations downward from $139 

million, stating that “[a]s global demand for raw materials outpaces supply, Romeo 

Power is subject to a significant shortfall in cell capacity industrywide, and now 

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COMPLAINT 15  

 

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expects its revenue for 2021 to be in the range of $18-$40 million.”   

54. That same day, Romeo held an earnings call with investors in which 

Selwood further explained “the worldwide market for battery sales is experiencing a 

significant shortage of certain high quality performance cells.  That shortage has 

affected our ability to source adequate supplies of key battery cells critical to our 

specialized, high density battery solutions.”  Selwood also disclosed that Romeo was 

“making material updates to our production and revenue outlook for 2021” and that 

“the impact to [Romeo’s] ability to generate revenue in 2021 is significant.”  

55. Following these announcements, Romeo’s stock price dropped $2.04 per 

share, or approximately 19.7%, to close at $8.33 per share on trading volume 

approximately 7,250% higher than the previous day. 

3. Selwood acted negligently 

56. Selwood failed to act as a reasonable person would under the 

circumstances.  The registration and proxy statement stated that Romeo’s financial 

condition and business “could” be harmed by its suppliers’ inability to provide cells 

or a cell shortage, when in fact, Selwood had substantial, reliable information that this 

was already happening, and that Romeo’s business, financial condition, and operating 

results would be harmed through 2021.  He nevertheless:  reviewed and signed off on 

the disclosure contained in the SEC filings; signed the notice of solicitation in the 

proxy statement/prospectus; consented to the inclusion of his name in the proxy 

statement/prospectus as a director nominee; and authorized his signature to be placed 

on the Form S-1 registration statement.  

57. Selwood had a duty to provide prompt written notice of any 

development known to him that would cause the proxy statement/prospectus to 

contain materially false or misleading information.  Instead, Selwood failed to act 

reasonably under the circumstances by not disclosing the substantial and reliable 

information he had received and continued to receive, about Romeo Systems’ 

suppliers experiencing a shortage of cells and the negative impact this had on the 

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COMPLAINT 16  

 

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company’s financial condition and prospects.   

4. Selwood obtained property through the materially false and 

misleading statements 

58. Romeo Systems’ merger with RMG closed on December 29, 2020, and 

provided the company with access to approximately $394 million in capital, including 

$160 million that was raised from the PIPE offering. 

59. Selwood also personally benefitted from the materially false and 

misleading statements identified above in the Form S-4 registration statement and the 

proxy statement, because the proxy statement was used to solicit votes to approve a 

merger which, upon consummation of the transaction:  (i) placed him on the board of 

directors of a public company; (ii) allowed him to convert his Romeo Systems stock 

options into publicly tradeable common stock of Romeo; and (iii) allowed him to 

exchange his existing Romeo Systems shares into publicly tradable Romeo stock. 

D. Selwood’s Conduct Operated as a Fraud 

60. In the time period leading up to the December 29, 2020 final amendment 

to RMG’s S-4 registration statement, Selwood negligently failed to convey the 

information he knew about a cell shortage to the public.  Instead, Selwood regularly 

provided mostly positive updates about the company’s efforts to secure new business 

and the size of its backlog, thereby negligently conveying a false impression of 

Romeo’s condition and ability to operate as planned.  Selwood engaged in this 

practice despite Romeo’s obligation to disclose any development known to Romeo 

that would cause the proxy statement in the S-4 to contain materially false or 

misleading information he knew or should have known would be used to solicit votes 

in favor of the merger.   

61. After the merger closed on December 29, 2020 through January 18, 

2021, Selwood received additional information that the cell shortage had become 

more acute and that cell suppliers were not able to provide cells timely or in the 

quantities that Romeo needed.  Selwood, however, authorized his signature to be 

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COMPLAINT 17  

 

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placed on the materially false and misleading S-1 registration statement on January 

18, 2021.  He did not make any attempt to halt the offering that the S-1 covered or 

correct the misleading risk factor disclosure, even after learning on January 19, 2021 

that Supplier One had stopped cell allocation commitments until further notice and 

placed its long-term negotiations with Romeo on hold.  Before the S-1 was declared 

effective on January 26, 2021, Selwood continued his practice of negligently failing 

to convey the information he knew or should have known about a cell shortage. 

62. Selwood failed to act as a reasonable person would under the 

circumstances.  At all times, Selwood, as CEO of a soon to be, and then, publicly 

traded company, failed to use the degree and skill that a reasonable person preparing 

documents for filing with the SEC would be expected to use. 

FIRST CLAIM FOR RELIEF 

Materially False or Misleading Statements 

Violations of Securities Act Section 17(a)(2) 

63. The SEC realleges and incorporates by reference paragraphs 1 through 

62 above. 

64. By engaging in the conduct described above, Defendant Selwood, 

directly or indirectly, in the offer or sale of securities, and by the use of means or 

instruments of transportation or communication in interstate commerce or by use of 

the mails, obtained money or property by means of untrue statements of a material 

fact or by omitting to state a material fact necessary in order to make the statements 

made, in light of the circumstances under which they were made, not misleading. 

65. By engaging in the conduct described above, Defendant Selwood 

violated, and unless restrained and enjoined will continue to violate, Sections 17(a)(2) 

of the Securities Act, 15 U.S.C. § 77q(a)(2). 

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COMPLAINT 18  

 

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SECOND CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Securities Act Section 17(a)(3) 

66. The SEC realleges and incorporates by reference paragraphs 1 through 

62 above. 

67. By engaging in the conduct described above, Defendant Selwood, 

directly or indirectly, in the offer or sale of securities, and by the use of means or 

instruments of transportation or communication in interstate commerce or by use of 

the mails, engaged in transactions, practices, or courses of business which operated or 

would operate as a fraud or deceit upon the purchaser. 

68. By engaging in the conduct described above, Defendant Selwood 

violated, and unless restrained and enjoined will continue to violate, Sections 17(a)(3) 

of the Securities Act, 15 U.S.C. § 77q(a)(3). 

THIRD CLAIM FOR RELIEF 

Solicitation of Proxies in Violation of Rules and Regulations 

Violations of Section 14(a) of the Exchange Act and  

Rule 14a-9 Thereunder 

69. The SEC realleges and incorporates by reference paragraphs 1 through 

62 above. 

70. By engaging in the conduct described above, Selwood, by use of the 

mails, or the means of instrumentalities of interstate commerce or any facility of a 

national securities exchange, solicited proxies without furnishing each person 

solicited a proxy statement containing the information specified by the proxy rules, 

and used proxy statement containing statements which, at the time and in light of the 

circumstances under which they are made, were false or misleading with respect to a 

material fact, or omitted to state material facts necessary to make the statement 

therein not false or misleading or necessary to correct any statement in any earlier 

communication with respect to the solicitation of a proxy for the same meeting or 

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COMPLAINT 19  

 

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subject matter which has become false or misleading. 

71. By engaging in the conduct above, Selwood violated, and unless 

enjoined will continue to violate, Exchange Act Section 14(a), 15 U.S.C. § 78n(a), 

and Rule 14a-9 thereunder, 17 C.F.R. § 240.14a-9. 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendant Selwood 

committed the alleged violations. 

II. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendant Selwood, and his officers, agents, 

servants, employees and attorneys, and those persons in active concert or 

participation with any of them, who receive actual notice of the judgment by personal 

service or otherwise, and each of them, from violating Section 17(a) of the Securities 

Act, 15 U.S.C. §77q(a), and Section 14(a) of the Securities Exchange Act of 1934 

(“Exchange Act”), 15 U.S.C. § 78n(a), and Rule 14a-9, 17 C.F.R. § 240.14a-9. 

III. 

Issue an order against Defendant Selwood, pursuant to Section 21(d)(5) of the 

Exchange Act, 15 U.S.C. § 78u(d)(5), prohibiting him from acting as an officer or 

director of any issuer that has a class of securities registered pursuant to Section 12 of 

the Exchange Act, 15 U.S.C. § 781, or that is required to file reports pursuant to 

Section 15(d) of the Exchange Act, 78 U.S.C. § 78o(d). 

IV. 

Order Defendant Selwood to pay a civil penalty under Section 20(d) of the 

Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 

U.S.C. § 78u(d)(3). 

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COMPLAINT 20  

 

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V. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

VI. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

Dated:  September 27, 2024  

 /s/ Ruth C. Pinkel 
RUTH C. PINKEL 
Attorney for Plaintiff 
Securities and Exchange Commission 

 

Case 2:24-cv-08336     Document 1     Filed 09/27/24     Page 20 of 20   Page ID #:20