company Canoo

Leading electric vehicle (EV) company Canoo has recently agreed to a $1.5 million settlement with the Securities and Exchange Commission (SEC). The dispute was centered around Canoo’s disclosure of information in the early stages of its 2019 initial public offering (IPO).

The SEC allege that Canoo had failed to appropriately disclose potential conflicts of interest to prospective investors during its first public offering. Canoo’s board of directors was accused of failing to disclose executive compensation initiatives and share option contracts, which benefited the company’s CEO, Ulrich Kranz.

In 2019, Canoo held its IPO and went public, raising $1.1 billion dollars in its first month of trading. The SEC alleged that the company did not make required disclosures about executive compensation to prospective investors, overlooking a set of specific regulations. This prompted the SEC’s investigation, leading to the settlement announced this month.

Under the conditions of the settlement, Canoo will pay a civil penalty of $1.5 million, but will not be required to offer true or meaningful admissions of wrongdoing. In its settlement, Canoo came to a financial agreement with the SEC, while still maintaining its defense of their actions during the IPO.

The settlement reflects a confluence between Canoo’s desire to end the dispute with the SEC and still avoid making any direct admissions of wrongdoing. While the $1.5 million settlement is the largest amount that Canoo has been fined to date, the company is getting off relatively easy in terms of legal expenses and public reputation.

This outcome makes it clear that Canoo is still open to doing business and investment opportunities, despite being initially brought up on charges by the SEC. Further, this case indicates that EV companies considering an IPO may need to take extra care when it comes to disclosing information, as the SEC does not take violations lightly.

Canoo’s $1.5 million settlement sets an important precedent, illustrating the importance of overall transparency on the part of EV companies considering an IPO. While Canoo’s settlement with the SEC is not an admission of guilt, it serves as a reminder to EV companies that proper disclosure and transparency are essential when undergoing a public offering.