The Securities and Exchange Commission today announced settled charges against Canoo Inc., a company that designs and produces electric vehicles, its former Chief Executive Officer, Ulrich Kranz, and its former Chief Financial Officer, Paul Balciunas, for making inaccurate revenue projections. The SEC also charged Canoo and Kranz with misconduct related to nearly $1 million in undisclosed executive compensation.
The SEC’s complaint against Kranz and Balciunas, filed in federal district court in California, alleges that from August 2020 until March 2021, during which time Canoo became publicly listed through a transaction with a special purpose acquisition company (SPAC), Canoo’s public financial projections were materially inaccurate. According to the complaint, Canoo projected revenue of $120 million for 2021 and $250 million for 2022, in connection with the provision of engineering services to other companies; these projections were allegedly unreasonable because, as Kranz and Balciunas should have known, the two projects on which Canoo based nearly all of its projected revenue were no longer active or feasible. The complaint further alleges that in November 2019, Kranz entered into an agreement with two individuals who were significant investors in Canoo to receive up to $1 million in compensation related to his work at Canoo, and in October 2020, Kranz received over $900,000 from these two individuals. According to the complaint, this undisclosed arrangement caused Canoo to make inaccurate executive compensation disclosures from September 2020 until April 2021.
‘Enforcement 40’ for 2020
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