Several top executives at Lordstown Motors Corp. RIDE -9.57% sold off chunks of stock in the electric-truck startup ahead of reporting financial results, according to regulatory filings disclosing the transactions.

Securities lawyers and accountants say such trades raise questions about the companys internal controls, especially in light of its recent troubles.

In all, five top executives, including the companys president and its former chief financial officer, sold more than $8 million in stock over three days in early February, according to the filings. Lordstown Motors, which went public in October and plans to build electric trucks at a former General Motors Co. plant in Ohio, reported year-end results for the first time as a listed company in mid-March. Its net loss of 23 cents a share for the quarter was more than double analysts expectations, according to FactSet. The two-year-old startup has yet to begin production on its first model, a battery-powered pickup called the Endurance that is aimed at commercial buyers, such as businesses and fleet operators.

One of its executives, Chuan John Vo, who oversees Lordstown Motors propulsion division, sold almost all of his vested equity99.3%on Feb. 2, leaving him with 717 shares and proceeds of more than $2.5 million, the filings show.

President Rich Schmidt, a former Tesla Inc. manufacturing executive who joined the company in 2019, sold 39% of his vested equity over two days in February for $4.6 million, according to company filings. He used some of the proceeds to expand another venture that he had started recently, a turkey-hunting farm in Tennessee, a company spokesman said.

Three other executives, including Lordstown Motors former finance chief, who resigned last week, sold smaller holdings around the same time in February with the transactions ranging between roughly $250,000 and $400,000 in value, filings show.

Four of the five executives declined to comment through a Lordstown Motors spokesman. The company also declined to comment on its financial oversight of executives. The fifth, former Chief Financial Officer Julio Rodriguez, couldnt be reached for comment.

On June 14, the company said a special committee formed by Lordstown Motors board had looked into the executives stock sales and concluded they were made for reasons unrelated to the performance of the company. Securities lawyers, accountants and analysts say such transactions are highly unusual, particularly because they occurred during a period when many other publicly traded companies bar executives from selling shares. We wouldnt expect insiders to typically sell at that time in the quarter, said Max Magee, an analyst at InsiderScore, a research service that provides executive-trading data to investors to help guide investment decisions.

Most listed companies have so-called blackout periods that prevent business leaders from trading company stock outside of prearranged plans from some time around the end of a quarter to when results are released publicly. Such periods are intended to guard against the appearance of insider trading, a practice where executives use nonpublic knowledge of the companys performance to make trades before sharing it with the wider market. In a 2020 survey by Deloitte, 98% of companies reported having blackout periods prohibiting trades by top officers around quarterly disclosures.

At best, it suggests the company has weak internal control over the trading of their officers, said Daniel Taylor, an accounting professor who runs the Forensic Analytics Lab at the University of Pennsylvanias Wharton School.

The trading patterns exhibited by the Lordstown Motors officers in February, as well as other stock sales they executed in December, also stand out in another way, the lawyers and accountants say. The size of the stakes sold by some executives within months of the company going public are unusual, potentially signaling to investors a lack of confidence in the young companys future performance, they say.

The startups operations have been under intense scrutiny in recent months, following a March report by short seller Hindenburg Research that accused the company of misleading investors and promoting fictitious preorders for its forthcoming truck.

The special committee acknowledged that some of the companys statements about the preorders were inaccurate in certain respects but called the Hindenburg reports other claims false and misleading, the company said.

The companys practices have drawn the attention of the Securities and Exchange Commission, which has issued two subpoenas related to its merger and public statements, the company has disclosed. Lordstown Motors has said it is cooperating with the investigation.

Earlier this month Lordstown Motors stunned investors, amending its first annual statement to include a warning that it lacked the funds to begin production and might not be able to continue as a going concern.

Both its chief executive officer and its finance chief stepped down last week, the company said. Its stock peaked in mid-February at about $30.75 a share and has slid in recent months as challenges have piled up for the company. On Monday, the stock fell about 5.5% to $10.07. Shares are down about 50% for the year.

The early February trades by the five executives all occurred when the stock was trading at more than $24 a share, company filings show. Similarly, they were executed as news was beginning to spread that a prototype of its first electric-truck model caught fire 10 minutes into a road test in mid-January.

Lordstown Motors had sparked hope for many in Ohios Mahoning Valley when it took over GMs huge assembly plant in 2019 with plans to convert it for building electric trucks. In late October, it went public through a reverse merger with a special-purpose acquisition company, or SPAC, as new electric-vehicle startups were capturing attention and funds from Wall Street.

Executives typically receive stock as part of their compensation packages with the expectation that they will eventually sell, though investors generally like to see top executives hold on to significant stakes in their companies while on the job.

When they do want to sell, many executives use 10b5-1 plans that allow them to schedule trades ahead of time. These arrangements can give them a defense against insider-trading accusations but have recently come under increased scrutiny from the SEC because some investors say they can be manipulated and are subject to abuse.

Lordstown Motors filings dont indicate that the trades were conducted under prescheduled 10b5-1 plans. The spokesman for Lordstown Motors declined to comment on whether the executives used such plans.

Whartons Mr. Taylor pointed to the grouping of stock trades, which were executed by multiple Lordstown Motors executives around the same time in February, as also being unusual. In some cases, an executive might cash out a stake to fund a large purchase or down payment, but to have five do so at the same time stands out, he said.

In the case of Mr. Schmidt, Lordstown Motors president, his stock sale helped finance another venture. Three weeks after the February sales, Mr. Schmidt incorporated another business, Rainbow Rock Farm LLC. Mr. Schmidt and his wife also made a $519,000 land purchase at the time, property records show. A website for Rainbow Rock Farm shows it offers turkey hunting, Black Angus beef, hay rides and blueberry picking on 363 acres of land in Tennessee. The Lordstown Motors spokesman said Mr. Schmidts wife runs the farm. She couldnt be reached for comment. Following last weeks resignation of the CEO and finance chief, Mr. Schmidt received another 500,000 in new stock options. The options, which would allow Mr. Schmidt to buy shares for $11.41 apiece, vest over three years if the companys share price stays above $20 for 30 consecutive days. Each of the other remaining executives who sold shares in February received 200,000 in new stock awards.

• Why are the stock sales by Lordstown executives potentially problematic?
• Why are the trading patterns of Lordstown executives considered unusual?
• What are "blackout" periods and why do they exist?
• What are 10b5-1 plans and how are they often used by executives of publicly traded companies?