TuSimple Holdings Inc.
co-founder Mo Chen took control of the self-driving truck company as federal authorities continue to investigate TuSimple’s relationship with Mr. Chen’s other startup, a Chinese hydrogen trucking company.
A TuSimple filing with the Securities and Exchange Commission on Wednesday showed Mr. Chen had 59 percent of the voting power in the San Diego-based company, giving him control as of Nov. 9, a day before the company announced it had kicked out the board of directors. Mr. Chen acquired the stake through stock purchases using his family trust and BVI-based entities, according to the securities filing.
Mr. Chen did not respond to a request for comment. TuSimple’s newly appointed CEO, Cheng Lu, said: “We have a strong sense of urgency to get our company back on track and regain the trust of all stakeholders.”
The consolidation of power under Mr. Chen is part of a dramatic series of recent developments at TuSimple. Its previous CEO, who had been fired by the board of directors, turned around and kicked the board out. With those changes, and now with Mr Chen’s controlling stake, TuSimple said it would no longer follow some of the corporate governance rules that apply to most other US-listed companies.
The management and ownership changes follow a report by The Wall Street Journal last month that TuSimple and its management facing investigations by the Federal Bureau of Investigation, the SEC and the Committee on Foreign Investment in the U.S. — a national security panel known as Cfius — about whether the company improperly funded and transferred technology to Mr. Chen’s newly formed startup, Hydron Inc.
Hydron has most of its operations in China and has financing from China. Investigators are looking into whether TuSimple’s management failed to properly disclose its relationship with Hydron and whether it defrauded TuSimple’s investors by sending valuable technology to an overseas adversary, the Journal reports.
TuSimple previously said it was not aware of any FBI or SEC investigations and that it had explored a partnership with Hydron to buy cargo trucks, but had no further financial or business dealings with the startup.
TuSimple said in a filing Wednesday that it is now a so-called controlled company, a designation that means it does not have to comply with certain stock exchange rules, including one requiring the majority of its board to be made up of independent directors .
The company said it intends to take all possible corporate governance exemptions that are available under Nasdaq stock market rules.
The company said it still plans to establish an independent audit committee and replace its chief security officer, whom it fired earlier this month. That security director is a former US national security official who was appointed as part of a settlement between TuSimple and Cfius, which investigated TuSimple’s ties to China last year.
TuSimple shares closed Wednesday at $2.59, down more than 50% from a month earlier. Its initial public offering price in 2021 was $40 per share.
TuSimple’s board of directors fired Chief Executive Xiaodi Hou in October after a board investigation concluded that TuSimple had shared confidential information with Hydron, Mr. Chen’s startup. Mr. Howe, also a co-founder of TuSimple, was its CTO and Chairman of the Board.
Mr Howe responded that his dismissal was without cause and that he would be vindicated. A spokeswoman for Mr Howe declined to comment.
Mr. Chen and Mr. Hou, both major shareholders of TuSimple, joined forces to fire the board. Mr. Chen returned as chairman of the board, a position he held until earlier this year, when he largely stepped back from his responsibilities at TuSimple to focus on Hydron. Mr. Lu, who was TuSimple’s CEO from 2020 to 2022, has returned to his old position.
The company confirmed on Wednesday that Ersin Hummer, the interim chief executive who took over from Mr Howe, will leave TuSimple this month with a severance package of about $340,000.
“The new board has put forward its choice of CEO and as a result, at my request, we have mutually agreed that it would be best to go our separate ways,” Mr. Hummer said.
Write to Heather Somerville at [email protected]
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