TuSimple Holdings Inc.
Co-founder Mo Chen has stepped down to lead the self-driving truck company as federal authorities continue to investigate TuSimple’s relationship with Mr. Chen’s other startup, a Chinese hydrogen truck company.
TuSimple’s filing with the Securities and Exchange Commission on Wednesday shows that Mr. Chen holds 59% of the voting power at the San Diego-based company, giving him control as of Nov. 9, a day before the company announced he was having resigned. Board of Directors. Mr. Chen acquired the stake through stock purchases using his family trust and entities based in the British Virgin Islands, according to the securities filing.
Mr. Chen did not respond to a request for comment. Cheng Lu, TuSimple’s newly appointed chief executive officer, 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 events at TuSimple. The previous chief executive, who was berated by the board of directors, turned around and dismissed the board. With these changes, and now subject to Mr. Chen’s control, TuSimple said it would no longer follow some of the corporate governance rules that apply to most other companies listed on the US stock exchange.
The leadership and ownership changes follow a Wall Street Journal report last month that TuSimple and its leadership were facing investigations by the Federal Bureau of Investigation, the SEC and the Committee on Foreign Investment in the US – a national security panel known as Cfius – whether the company improperly funded and transferred the technology to Mr. Chen’s recent startup, Hydron Inc.
Hydron has most of its operations in China and has funding from China. Investigators are looking into whether TuSimple’s leadership 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 reported.
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 financial or other business relationship with the startup.
TuSimple said in its Wednesday filing that it is now a so-called controlled company, a designation that means it does not have to comply with several stock exchange rules including one that requires a majority of its board to be made up of independent directors.
The company said it intended to take all possible corporate governance exemptions available under Nasdaq Stock Market rules.
The company said it still plans to form an independent audit committee and replace its security director, who it fired earlier this month. That security director is a former US national security official who was brought in as part of a deal between TuSimple and Cfius, which investigated TuSimple’s ties to China last year.
TuSimple shares closed Wednesday at $2.59, a drop of more than 50% from a month earlier. The initial public offering price in 2021 was $40 per share.
TuSimple’s board of directors fired CEO Xiaodi Hou in October, after a board investigation concluded that TuSimple had shared confidential information with Hydron, Mr. Chen’s startup. Mr. Hou, also a co-founder of TuSimple, was its chief technical officer and chairman of the board.
Mr. Hou said in response that his firing was unprovoked and would be justified. A spokesman for Mr. Hou declined to comment.
Mr. Chen and Mr. Hou, the two major shareholders of TuSimple, came together to double the board. Mr Chen returned as chairman of the board, a position he held until earlier this year, when he stepped down from his TuSimple responsibilities to focus on Hydron. Mr. Lu, who was the CEO of TuSimple from 2020 to 2022, returned to his old position.
The company confirmed on Wednesday that Ersin Yumer, the interim CEO who took over from Mr. Hou, would leave TuSimple this month with a severance of about $340,000.
“The new board implemented their choice of CEO and as a result, at my request, we agreed together that it would be better for us to go in other ways,” said Mr. Yumer.
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