SEC Exposes Hydrogen Vehicle Company Hyzon Motors and Former Executives for Investor Misleading

The Securities and Exchange Commission (SEC) has announced settled fraud charges against Hyzon Motors Inc., a New York-based hydrogen fuel cell electric vehicle (FCEV) manufacturer, for deceiving investors regarding its business relationships and vehicle sales. The allegations span the period before and after a merger with a publicly-traded special purpose acquisition company (SPAC) in July 2021. Additionally, the SEC has charged two former executives, Craig M. Knight, the former CEO, and Max C.B. Holthausen, former managing director of Hyzon's European subsidiary, for their involvement in the fraudulent scheme.

The SEC's complaint outlines that Hyzon Motors engaged in misrepresentation concerning its interactions with potential customers and suppliers, creating a misleading impression of imminent substantial sales transactions. The company is also accused of falsely claiming to have delivered its first FCEV in July 2021, even releasing a misleading video of the vehicle appearing to run on hydrogen, despite the vehicle's inability to operate on hydrogen power. Moreover, Hyzon reported the sale of 87 FCEVs in 2021, a claim that was proven false as no vehicles were sold that year.

Knight is alleged to be responsible for making false statements regarding Hyzon's customer and supplier relationships, while Holthausen is accused of providing false information about the delivery of the company's first FCEV and the reporting of certain FCEV sales.

SEC’s Focus on Accountability

Jason Burt, Regional Director of the SEC’s Denver Regional Office, emphasized the significance of transparency and accurate disclosure under federal securities laws. He stated, "The defendants allegedly violated this principle by misleading investors about virtually every aspect of Hyzon’s business. The terms of today’s settlement, if approved by the court, will hold Hyzon and responsible individuals accountable for their misconduct."

The SEC's complaint has been filed in the U.S. District Court for the Western District of New York, and it charges Hyzon, Knight, and Holthausen with violating antifraud and other provisions of federal securities laws. Without admitting or denying the allegations, the three parties have agreed to permanent injunctions. They will pay civil penalties of $25 million (Hyzon), $100,000 (Knight), and $200,000 (Holthausen). Furthermore, Knight and Holthausen will face restrictions from serving as officers or directors of publicly traded companies for five and ten years, respectively.

Mark Gordon, Hyzon's former chief financial officer, reimbursed the company for bonuses he received during the twelve-month period following Hyzon's financial statement misstatements. Consequently, the SEC did not pursue a clawback action against him under Section 304 of the Sarbanes-Oxley Act of 2002. Gordon was not charged with misconduct in the SEC's complaint.

The settlements are still subject to court approval.