TuSimple, a leading developer of autonomous driving technology for semi-trucks, said it’s at risk of being delisted from the Nasdaq stock exchange after its cofounders, including its recently ousted CEO, used their majority voting stake in the company to fire independent members of its board of directors.
The San Diego-based company said in a filing on Thursday that shareholding companies controlled by cofounders Mo Chen and Xiaodi Hou, TuSimple’s former CEO, CTO and architect of its technology, had removed independent directors Brad Buss, Karen Francis, Michelle Sterling and Reed Werner from the board, leaving Hou as the sole remaining board member. The company acknowledged that doing so put it at risk of being removed from Nasdaq, which requires a minimum number of outside directors.
“The company intends to be compliant with these Nasdaq Listing Rules by or before the end of the applicable cure period,” TuSimple said in a filing with the Securities and Exchange Commission. It also said Cheng Lu, who served as CEO before Hao took that position earlier this year, is resuming the job, replacing interim CEO Ersin Yumer who was tapped to replace Hou last month. Chen is rejoining the board as its executive chairman.
Hou declined to comment on the matter when contacted by Forbes.
The shakeup comes after Hou’s removal following a report that he was being investigated for his role in improperly financing and transferring technology to a Chinese startup – led by Mo Chen. Hou, a naturalized U.S. citizen, has denied doing anything improper.
Hou’s removal occurred shortly after the Wall Street Journal reported that the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment in the U.S., known as CFIUS, were all probing TuSimple’s connection to Hydron Inc., a hydrogen truck startup founded by TuSimple cofounder Chen, citing people familiar with the matter.
The concern is that Hou and other executives failed to properly disclose the relationship with Hydron, a potential breach of fiduciary duties and securities law, according to the people who spoke anonymously. Investigators are also probing whether TuSimple shared its U.S.-developed autonomous driving technology with Hydron, a company with Chinese operations, a potential violation of U.S. rules, the report said.
Following that report, TuSimple’s board said it “unanimously determined that it was necessary and in the best interest of the shareholders to terminate Xiaodi Hou,” saying it had “lost trust and confidence in Dr. Hou’s judgment, decision-making and ability to lead the company as CEO.” It also said the decision was made in connection with an investigation by the board’s audit committee, independent of any media coverage.”
Hou denied any improprieties in a LinkedIn post. “I have been completely transparent in both my professional and personal life and I fully cooperated with the Board because I have nothing to hide,” he said. “I want to be clear that I fundamentally deny any suggestions of wrongdoing.”
(For more on Hou and TuSimple, see, Robo-Rigs: The Scientist, The Unicorn and The $700 Billion Race To Create Self-Driving Semi-Trucks)
The Caltech-trained computer scientist created TuSimple with Chen in 2015, intending to perfect autonomous driving for heavy-duty trucks rather than cars. Given the somewhat easier operating environment that semis experience–highways rather than crowded urban streets–and a persistent shortage of long-haul truck drivers, Hou believed it would be a faster path to commercialization. Companies including Alphabet’s Waymo, Aurora, Embark and Kodiak are also competing to bring robotic trucks to market in the next few years.
TuSimple shares jumped 19% to $2.70 on Thursday before the announcement, catching a surge in market activity from a better-than-expected inflation report. But as of this writing, it was down more than 3% in after-hours trading.