SEC Charges Hydrogen Vehicle Co. Hyzon Motors and Two Former Executives for Misleading Investors

The Securities and Exchange Commission (SEC) has officially disclosed the resolution of fraud charges against Hyzon Motors Inc., a company based in upstate New York specializing in the production of hydrogen fuel cell electric vehicles (FCEVs). The charges pertain to Hyzon’s misleading statements to investors regarding its business relationships and vehicle sales, both prior to and following its merger with a publicly-traded special purpose acquisition company (SPAC) in July 2021. Additionally, the SEC has charged Craig M. Knight, Hyzon’s former CEO, and Max C.B. Holthausen, the former managing director of Hyzon’s European subsidiary, for their involvement in this fraudulent scheme.

As outlined in the SEC’s complaint, Hyzon engaged in misrepresentation by inaccurately portraying the status of its business interactions with potential customers and suppliers. This manipulation created a false impression that significant sales transactions were on the brink of realization. The complaint further alleges that Hyzon falsely claimed to have delivered its inaugural FCEV in July 2021 and even posted a misleading video of the vehicle supposedly operating on hydrogen, despite the vehicle not being equipped for hydrogen power. Furthermore, Hyzon inaccurately reported that it had sold 87 FCEVs in 2021 when, in reality, no vehicle sales had occurred during that year. Knight is alleged to have been responsible for the false statements regarding Hyzon’s customer and supplier relationships, while Holthausen is alleged to have played a role in the false statements regarding the delivery of the first FCEV and the inaccurate reporting of certain FCEV sales.

Jason Burt, Regional Director of the SEC’s Denver Regional Office, emphasized the importance of transparency and accurate disclosure in adhering to federal securities laws. Burt stated, “Transparency in the form of full, fair, and accurate disclosure is fundamental to the federal securities laws. 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, filed in U.S. District Court for the Western District of New York, charges Hyzon, Knight, and Holthausen with violations of the antifraud and other provisions of federal securities laws. Without admitting or denying the SEC’s allegations, Hyzon, Knight, and Holthausen have each consented to permanent injunctions and agreed to pay civil penalties of $25 million, $100,000, and $200,000, respectively. Furthermore, Knight and Holthausen have accepted prohibitions from serving as officers or directors of publicly traded companies for periods of five and ten years, respectively. These settlements are subject to court approval.

Additionally, Knight and Mark Gordon, Hyzon’s former chief financial officer, have each reimbursed Hyzon in the amounts of $252,000 and $122,500, respectively, representing bonuses received during the twelve-month period following Hyzon’s misstatements of its financial statements. Consequently, the SEC did not pursue clawback actions against them under Section 304 of the Sarbanes-Oxley Act of 2002. Importantly, the SEC’s complaint did not allege misconduct on Gordon’s part.