Hyzon to pay $25M penalty to settle alleged fraud charges by SEC

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Hyzon Motors Inc. will pay a $25 million civil penalty to settle fraud charges filed by the U.S. Securities and Exchange Commission over misleading business practices by former company executives in 2021.

The SEC alleged Hyzon misled investors “about virtually every aspect of Hyzon’s business.”

The Honeoye Falls-based company is a high-power hydrogen fuel cell technology developer and global supplier of zero-emission heavy-duty fuel cell electric vehicles.

The SEC complaint, filed in U.S. District Court for the Western District of New York, alleged Hyzon “misrepresented the status of its business dealings with potential customers and suppliers to create the false appearance that significant sales transactions were imminent.”

The complaint also claimed Hyzon “falsely stated it had delivered its first fuel cell electric vehicles (FCEV) in July 2021, even going so far as posting a misleading video of the vehicle purportedly running on hydrogen, when the vehicle was not equipped to operate on hydrogen power.”

Hyzon also falsely reported the sale of 87 FCEVs in 2021 when, in reality, none had been sold, according to the SEC filing.

The SEC said former Hyzon CEO Craig Knight allegedly was responsible for the false statements about delivery of the first FCEVs as well as the sales claim.

“Transparency in the form of full, fair and accurate disclosure is fundamental to the federal securities laws,” Jason Burt, regional director of the SEC’s Denver Regional Office, said in a news release. “The defendants allegedly violated this principle by misleading investors about virtually every aspect of Hyzon’s business.”

Without admitting or denying the allegations, Hyzon said it will pay the $25 million 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 settlement is contingent upon court approval.

In the second quarter of 2023, Hyzon accrued a $22 million loss contingency, based upon management’s assessment of the SEC investigation, the company statement said.

“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 news release.

“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,” Meeks added.

Knight agreed to pay a $100,000 penalty and cannot serve on the board of any publicly traded company for five years, the SEC said. Max C.B. Holthausen, a former managing director of a Hyzon European subsidiary, agreed to a $200,000 penalty and a 10-year ban from board service on any publicly traded company.

Knight also will return $252,000 to Hyzon and Mark Gordon, the company’s former chief financial officer, will return $122,000. The money had been paid as compensation for reaching certain incentives, Hyzon said.

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