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Startup EV Canoo sues major investor over sketchy stock sales – TechCrunch

Electric vehicle start-up Canoo has filed a lawsuit against one of its major shareholders, demanding that the company repay more than $61 million in “short-term profits”.

The short-term profits rule states that insiders of the company, such as large shareholders, must return profits made on the purchase and sale of securities within six months. Canoo alleges that DD Global Holdings improperly profited from its recent stock sales, according to a lawsuit filed Monday in Manhattan federal court. Bloomberg was the first to report.

Pak Tim Li, the beneficial owner of DD Global, was one of Canoo’s top three investors at the end of 2017. He is also believed to be the son-in-law of Jia Qinglin, who until 2012 was the fourth Communist Party member. Party in China.

When the startup merged with a SPAC in 2020, Li owned more than 26% of Canoo shares through DD and other affiliates. The significant stake required oversight from the US Committee on Foreign Investment, which has a national security agreement in place that says DD Global must own 10% or less of Canoo by Feb. 28, 2022, or else it would have to transfer all shares to a voting trust.

In November 2021, DD Global transferred approximately 35 million Canoo shares to Canoo CEO Tony Aquila’s LLC. On that day, the stock price closed at $11.43 per share with a volume-weighted average price (VWAP) of $11.26, according to the lawsuit. At this point DD Global still owned 18.5% of Canoo, so in March 2022 it sold an additional 10.5 shares to Bank J. Safra Sarasin AG on behalf of an unidentified buyer. On that day, Canoo shares closed at $5.57 per share and had a VWAP of $5.44.

Canoo now alleges DD Global acquired the same number of shares — 10.5 million — at the same time it sold them through a stock exchange transaction, according to the lawsuit. The EV startup is seeking to uncover the identified buyer of the shares sold in March, as well as any other DD Global transactions that have not been reported.

At the same time, Canoo alleges that as of March 15, 2022, DD Global remains the beneficial owner of more than 10% of Canoo’s total outstanding common stock, which would put it in violation of the National Security Agreement.

Canoo’s stock is down 5.12% today, trading at $3.61 after hours. The stock has lost more than half of its value since the start of 2022.