Hyzon to Pay $25 Million Fine After Settling With SEC
Hyzon Motors will pay a $25 million fine to the U.S. Securities and Exchange Commission after an investigation, the Class 8 hydrogen-powered truck manufacturer said.
The top U.S. securities regulator accused Hyzon of misleading investors about its business relationships and vehicle sales before and after a July 2021 merger with a publicly traded special purpose acquisition company, Decarbonization Plus Acquisition Corp.
Hyzon, the SEC alleged, misrepresented business dealings with potential customers and suppliers, creating the “false appearance that significant sales transactions were imminent.”
The original equipment manufacturer also was accused of falsely stating it delivered its first hydrogen-powered truck in July 2021, including posting a video online of a vehicle running on hydrogen that was not equipped to operate on hydrogen power.
Hyzon later falsely reported the sale of 87 trucks in 2021, when none had been sold in that year, the SEC alleged.
Knight
The complaint, filed in the U.S. District Court for the Western District of New York, charged Hyzon, the company’s ex-CEO Craig Knight, and one-time senior executive Max Holthausen with violating the anti-fraud and other provisions of federal securities laws.
Knight allegedly was responsible for the false statements about customer and supplier relationships. A former managing director of the company’s Hyzon Motors Europe unit, Holthausen allegedly was responsible for false statements about deliveries and for false reporting of certain sales.
Knight and Holthausen also settled the SEC allegation and are set to pay $100,000 and $200,000, respectively, in civil penalties. The two former executives also will be prohibited from serving as officers or directors of a publicly traded company for five and 10 years, respectively.
Knight and Mark Gordon, Hyzon’s former chief financial officer, returned $252,000 and $122,500, respectively, in incentive compensation the company previously paid them.
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Without admitting or denying the allegations in the SEC’s complaint, Rochester, N.Y.-based Hyzon said Sept. 26 the settlement had been accepted, but still needs court approval.
Hyzon said it will pay the fine in three installments — $8.5 million within 30 days of entry of final judgment, $8.5 million by Dec. 31, 2024, and $8 million within 730 days of entry of final judgment.
The company already took a $22 million loss against its earnings in the second quarter of 2023 in anticipation of the fine, it said.
After the disclosure of the settlement, Hyzon’s share has been little changed at around $1.20. It has a 52-week high of $2.35 and 52-week low of 45 cents.
“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 current CEO Parker Meeks, who took the role in an interim capacity in August 2022, replacing Knight.
In August, Hyzon completed the first commercial run of one of its liquid hydrogen powered Class 8 trucks in Texas with Performance Food Group Inc. which ranks No. 5 in the Transport Topics Top 100 list of private carriers in North America.
Starting in Temple, Texas, the truck completed deliveries to customers near Dallas, traveling more than 540 miles in a 16-hour run.
Hyzon completed 15 vehicle trials in North America between March 2022 and the end of June 2023, the company said in its second-quarter 2023 earnings statement Aug. 8.
The company also said five 110-kW trucks are expected to be delivered to PFG late this year. During the most recent quarter, the 110-kW truck program moved from prototype to production, it added.
In June, Hyzon signed a deal with PFG to deliver the five trucks, with the possibility the Richmond, Va.-based company may take as many as 50. Some 15 of the potential 50 truck sales will be equipped with Hyzon’s more powerful 200-kW fuel cell system, based on a successful trial.
Trucks with the 200-kW powertrain will be available to customers from 2024 onward, according to Hyzon.
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