SEC fines Canoo $1.5 million over revenue projection reporting

(Reuters) — The U.S. Securities and Exchange Commission fined electric vehicle company Canoo Inc. $1.5 million Friday for what the regulator alleges were reporting failures related to hundreds of millions of dollars of unreasonable revenue projections.

The SEC said Canoo, former CEO Ulrich Kranz and Paul Balciunas, its former chief financial officer, misled investors about the company’s financial prospects before it went public in a merger with a special purpose acquisition company in December 2020.

In the run-up to the deal, Canoo had projected revenue of $120 million in 2021 and $250 million in 2022 based on deals to provide engineering services to other companies.

In March 2021, the carmaker’s stock tumbled 21% after it announced it would not achieve the anticipated revenue, the SEC said in court papers.

Canoo did not admit to wrongdoing in the settlement. The company said in May that it reached a tentative deal with the SEC to end the investigation, which began in April 2021.

The SEC also settled with former CEO Kranz and former CFO Balciunas. Mr. Kranz agreed to be barred from serving as an officer or director of public companies for three years and to pay a $125,000 fine. Mr. Balciunas agreed to a two-year bar, to pay a $50,000 fine and return $7,500 in profits.

The SEC said Mr. Kranz and Mr. Balciunas knew before the merger that the projects were unlikely to generate revenue.

The regulator also alleged that Kranz failed to disclose more than $900,000 in compensation he received from two Canoo investors in October 2020 to stay with the company.