Hyzon Motors, a global supplier of hydrogen fuel cell-powered heavy vehicles, was assessed a $25 million penalty by the Securities and Exchange Commission (SEC) in agreeing to settle charges it and its former executives misled investors regarding the sales of its vehicles.
Hyzon’s sales and customer relations were the subject of a short-seller report in 2021, which prompted the SEC to investigate the allegations. The agency found the company “misrepresented the status of its business dealings with potential customers and suppliers to create the false appearance that significant sales transactions were imminent,” it said in a press release Tuesday.
Craig Knight, Hyzon’s former chief executive officer, and Max Holthausen, former managing director of Hyzon’s European subsidiary, each agreed to pay fines in settling over their alleged roles in the scheme. Knight and Mark Gordon, the company’s former chief financial officer, each agreed to return compensation. Gordon was not charged by the SEC.
The details: Throughout the course of 2021, Hyzon made public announcements that exaggerated the status of its business dealings, the SEC alleged in its order. Examples included a misleading video posted on social media falsely claiming a vehicle being shown ran on hydrogen and disclosures the company’s European and Chinese subsidiaries sold 87 vehicles during the year when the vehicles hadn’t yet been completed.
The disclosures came around the time Hyzon completed a merger with a special purpose acquisition company to go public. In subsequent filings with the SEC, the company reported revenue from the purported sales by Hyzon Europe and Hyzon China but could not recognize revenue for the sales, the agency said. This required future restatements that saw Hyzon’s third-quarter and year-end 2021 revenue decline by 91 percent and 100 percent, respectively.
“Transparency in the form of full, fair, and accurate disclosure is fundamental to the federal securities laws,” said Jason Burt, regional director of the SEC’s Denver office, in the release. “The defendants allegedly violated this principle by misleading investors about virtually every aspect of Hyzon’s business.”
Compliance considerations: Hyzon was found by the SEC to have committed fraud, in addition to books and records and proxy shareholders violations.
Knight was fined $100,000 and agreed to reimburse Hyzon $252,000 for bonuses received during the 12-month period after Hyzon allegedly misstated its financial statements. Holthausen was fined $200,000. Gordon reimbursed Hyzon $122,500 in bonuses.
Company response: “Hyzon is pleased to put this chapter behind us and continue our disciplined execution of operational milestones, including commercial vehicle deployments and fuel cell technology developments,” said Hyzon CEO Parker Meeks in a statement. “With a strengthened board of directors and leadership team, a streamlined product offering, and a rationalized geographic footprint, we look forward to accelerating the hydrogen industry.”
Without admitting or denying the SEC’s allegations, Hyzon, Knight, and Holthausen each agreed to settle.