Hyzon Motors Inc. and former Hyzon executives have settled fraud charges leveled by the Securities and Exchange Commission by agreeing to pay a total of $25.7 million.
While Hyzon and executives accused of fraud by the SEC admit to no wrongdoing, former Hyzon CEO Craig Knight is barred from serving as an officer or director of a publicly held company for five years. Max Holthausen, who heads Hyzon’s European subsidiary, Holtzhausen Clean Technology, is similarly barred for 10 years.
The settlement calls for Hyzon to pay $25 million, and for Holthausen and Knight to personally pay $352,000 and $322,500, respectively in fines and disgorgement of bonuses.
The settlement is subject to court approval. The company’s payment is to be made in three installments with a first payment coming within 30 days of a final judgment being entered. The second is to be made by the end of next year. The final payment comes due within two years of a final judgment’s entry.
Based in Honeoye Falls, Hyzon makes hydrogen fueled trucks and buses.
The SEC charges stem from Hyzon’s allegedly false claims of having cut deals to sell vehicles and having already sold vehicles when it had in fact sold no vehicles in the year it claimed the sales. The SEC also accused the company of claiming to have delivered a hydrogen powered vehicle as its first sale when the sale was not of a hydrogen powered vehicle.
The SEC blames Knight for the false claims of vehicle sales and blames Holthausen for falsely claiming to have sold a hydrogen-powered vehicle. The allegedly false claims were made immediately prior to Hyzon going public by being acquired by a special purpose acquisition company.
Like their shell-company cousins, SPACs let companies go public by letting the firm step into a pre-existing publicly traded firm. They thus let firms sidestep stringent initial public offering requirements to provide investors with disclosures about an IPO’s finances and prospects
“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 a statement. “The defendants allegedly violated this principle by misleading investors about virtually every aspect of Hyzon’s business.”
Hyzon announced Knight’s departure in August 2022 after the company admitted to accounting irregularities and said that it would miss the deadline for posting its second-quarter results. The company subsequently narrowly avoided delisting by the NASDAQ stock exchange.
“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,” Hyzon CEO Parker Meeks said in a statement.
On Sept. 28, Hyzon shares (NASDAQ:HYZN) were trading in the $1.20 range.
Will Astor is Rochester Beacon senior writer. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected].