Electric vehicle start-up Canoo sues major investor over superficial share sale

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Electric vehicle startup Canoo has filed a lawsuit against one of its largest shareholders, demanding that the firm pay out more than $61 million in “short-term profits.”

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The short-term profit rule states that company insiders, like large shareholders, must return profits made from buying and selling securities within six months. According to a complaint filed in Manhattan federal court on Monday, Canoo alleges that DD Global Holdings wrongfully benefited from the recent sale of its shares. bloomberg was the first to report.

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Park Tim Lee, the beneficial owner of DD Global, was one of Canoo’s three original investors at the end of 2017. reportedly son-in-law of Jia Qinglin, who until 2012 was member of the fourth rank Communist Party of China.

When the startup merged with SPAC in 2020, Lee owned more than 26% of Canoo through DD and other affiliates. This substantial ownership required oversight by the U.S. Committee on Foreign Investment, which entered into a national security agreement that stated that DD Global must own 10% or less of Canoo by February 28, 2022, or else it would have to transfer all shares of the voting trust.

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In November 2021, DD Global transferred approximately 35 million shares of Canoo LLC to Canoo CEO Tony Aquila. According to the lawsuit, the stock price closed at $11.43 per share that day at a weighted average price (VWAP) of $11.26. At this point, DD Global still owned 18.5% of Canoo, so it sold 10.5 additional shares of Bank J. Safra Sarasin AG in March 2022 on behalf of an unnamed buyer. That day, Canoo’s stock closed at $5.57 per share with a VWAP of $5.44.

Canoo now alleges that DD Global acquired the same number of shares – 10.5 million – at the same time as selling them through a share swap deal, according to the lawsuit. Startup EV is seeking to disclose the identified buyer of the shares sold in March, as well as any other unreported transactions by DD Global.

At the same time, Canoo alleges that, as of March 15, 2022, DD Global remained the beneficial owner of more than 10% of all outstanding Canoo common stock, which would violate the national security agreement.

Shares of Canoo are down 5.12% today, trading at $3.61 after hours. The stock has lost more than half its value since the start of 2022.


Credit: techcrunch.com /

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