SEC Charges Hyzon Motors and Former Execs with Misleading Investors

SEC Charges Hydrogen Vehicle Co. Hyzon Motors and Two Former Executives for Misleading Investors

The Securities and Exchange Commission today announced settled fraud charges against Hyzon Motors Inc., an upstate New York-based company that builds hydrogen fuel cell electric vehicles (FCEVs), for misleading investors about its business relationships and vehicle sales before and after a July 2021 merger with a publicly-traded special purpose acquisition company, or SPAC. The SEC also charged Craig M. Knight, Hyzon’s former CEO, and Max C.B. Holthausen, former managing director of Hyzon’s European subsidiary, for their roles in the fraudulent scheme.

According to the SEC’s complaint, Hyzon misrepresented the status of its business dealings with potential customers and suppliers to create the false appearance that significant sales transactions were imminent. The complaint alleges that Hyzon also falsely stated that it had delivered its first FCEV in July 2021, even going as far as posting a misleading video of the vehicle purportedly running on hydrogen, when the vehicle was not equipped to operate on hydrogen power. The complaint further alleges that Hyzon later falsely reported that it sold 87 FCEVs in 2021, when in fact it had not sold any vehicles that year. Knight allegedly was responsible for the false statements about Hyzon’s customer and supplier relationships. Holthausen allegedly was responsible for Hyzon’s false statements about delivery of its first FCEV and for Hyzon’s false reporting of certain FCEV sales.

U.S. House Lawmakers Push SEC’s Gensler to Approve Spot Bitcoin ETF ‘Immediately’

On the eve of his scheduled appearance before the House Financial Services Committee, four members of that panel sent Gensler a letter contending that a spot bitcoin ETF is “indistinguishable” from the crypto futures ETFs for which the agency has already granted its blessing. Because of that, the agency should sign off on applicants requesting SEC approval, such as Fidelity, BlackRock’s iShares and Grayscale Investments, which shares CoinDesk’s parent company, Digital Currency Group.

“The SEC’s current posture is untenable moving forward,” said the letter from Reps. Mike Flood (R-Neb.), Tom Emmer (R-Minn.), Wiley Nickel (D-N.C.) and Ritchie Torres (D-N.Y.). “Following the Court of Appeals’ decision, there is no reason to continue to deny such applications under inconsistent and discriminatory standards.”

SEC Charges California Advisory Firm AssetMark for Failing to Disclose Multiple Financial Conflicts

The Securities and Exchange Commission today announced that Concord, California-based registered investment adviser AssetMark Inc. has agreed to pay more than $18 million to settle charges related to undisclosed conflicts of interest involving a cash sweep program operated by its affiliated custodian and its receipt of millions of dollars in revenue sharing payments from third-party custodians.

According to the SEC’s order, from at least September 2016 to January 2021, AssetMark failed to provide full and fair disclosure of conflicts of interest arising from its affiliate’s cash sweep program, which transferred, or “swept,” clients’ uninvested cash into interest-earning bank accounts. AssetMark did not advise clients that it helped set the fee that its affiliate custodian received for operating the cash sweep program. The fee reduced amounts of interest paid to those clients. Additionally, the order finds that, from at least January 2016 through August 2019, AssetMark received custodial support payments from some third-party custodians based on assets held in certain no-transaction-fee mutual funds, but it failed to disclose to clients that, in some cases, there were lower-fee share classes with lower expense ratios available to clients which, if used by clients, would not have resulted in payments to AssetMark.

SEC Charges Advisory Firm Bruderman Asset Management and its Principal for Failing to Disclose Misuse of Investment Funds

The Securities and Exchange Commission today announced that New York-based Bruderman Asset Management LLC (BAM) and its principal, Matthew J. Bruderman, agreed to settle charges related to their failure to disclose the misuse of proceeds raised from investment advisory clients and to the firm’s failure to implement reasonably designed written policies and procedures concerning the disclosure of conflicts of interest.

According to the SEC’s order, from at least February 2017 through August 2021, BAM and Bruderman advised at least 13 clients to invest at least $6.1 million in three companies in which Bruderman had decision-making authority and significant ownership interests. The SEC’s order finds that BAM and Bruderman failed to disclose to the clients that their investments would be temporarily used for other purposes, such as to fund BAM’s payroll and to repay loans owed to Bruderman or to the other companies with which he was affiliated. According to the SEC’s order, BAM, through Bruderman, also failed to implement reasonably designed written policies and procedures concerning the disclosure of conflicts of interest.

Gensler Reminds Hedge Funds He’s Still Sheriff of Wall Street

Big investment banks have already been collectively hit with about $2.5 billion in fines for poor record-keeping over employees’ use of texts to discuss business. But banks were allowed to mark their own homework, and the SEC reviewed only a sample of messages to keep them honest.

Gensler has taken a more invasive approach to private equity and hedge funds, reportedly including Apollo Global Management Inc., Carlyle Group Inc., Citadel and KKR & Co., even though money managers in general face less onerous record-keeping requirements than banks.

Binance, the World’s Biggest Crypto Firm, Is Melting Down

After FTX crashed, the world of crypto seemed to belong to the largest exchange, Binance. Less than a year later, Binance is the one in distress.

Under threat of enforcement actions by U.S. agencies, Binance’s empire is quaking. Over the past three months, more than a dozen senior executives have left, and the exchange has laid off at least 1,500 employees this year to cut costs and prepare for a decline in business. And while Binance still looms large in crypto, its dominance is dwindling.

JPMorgan’s UK bank Chase to ban crypto transactions

JPMorgan’s British retail bank Chase will ban crypto transactions made by customers from Oct. 16 due to an increase in fraud and scams, the company said on Tuesday.

“We’ve seen an increase in the number of crypto scams targeting UK consumers, so we have taken the decision to prevent the purchase of crypto assets on a Chase debit card or by transferring money to a crypto site from a Chase account,” a spokesperson for the bank said.

Sam Bankman-Fried’s fraud trial starts next week

There is going to be a lot of media about it? Here is a New York Post story about an Alameda Research software engineer in Hong Kong who had the rather cinematic experience of ordering lunch on the corporate credit card, having the card declined, and immediately drawing the correct conclusion, which was “I need to be on the next flight out of Chinese jurisdiction….”