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EV startup Canoo sues investor with China ties


Canoo Inc. accused its second-largest shareholder of wrongfully benefiting from recent share sales, and is trying in a lawsuit to claw back those profits.

The EV startup says that DD Global Holdings Ltd., a Cayman Islands firm, should pay back more than $61 million in so-called “short swing” profits, according to a complaint filed Monday in federal court in Manhattan.

The beneficial owner of DD Global Holdings is Pak Tam Li, who has run a large investment firm in China called Beijing Zhaode. He is reportedly the son-in-law of Jia Qinglin, who was once the fourth-most senior leader in China.

Li is one of the three original investors who helped Canoo get off the ground in late 2017, back when it was a private company known as Evelozcity. He held more than 26 pecent of Canoo’s shares through DD and other affiliates after the startup merged with a SPAC in late 2020.

Li’s ownership stake was significant enough that Canoo and DD Global Holdings entered into a national security agreement with the Committee on Foreign Investment in the U.S. at the time of the merger. That agreement states that DD Global is supposed to own 10 percent or less of Canoo by Feb. 28, 2022, or else transfer all of its shares to a voting trust.

DD Global agreed in October 2021 to sell 53.6 million shares to an LLC managed by Canoo’s chairman and CEO, Anthony Aquila. Canoo’s stock price nearly doubled by the time the sale was slated to close in November, though, and the two sides agreed to only transfer 35.3 million shares to Aquila’s LLC.

DD Global still owned 18.5 percent of Canoo after that sale, so in March 2022 it unloaded 10.5 million additional shares — though this time to Bank J. Safra Sarasin AG on behalf of an unidentified buyer. Aquila is now Canoo’s largest shareholder.

Canoo alleges in its complaint that, at the same time as the March transaction, DD Global acquired the same number of shares through an equity swap transaction. As part of the lawsuit, Canoo is trying to uncover the unidentified buyer of the shares sold in March, “as well as any additional transactions that have not been reported by DD Global.”

Canoo also claims in the suit that DD Global held more than 10 percent of the company’s shares following the March transaction, meaning it could be in violation of the national security agreement.

Canoo declined to comment on the complaint. The stock has lost more than half its value since the beginning of the year.

A lawyer for DD Global didn’t immediately respond to an emailed request for comment.

The case is Canoo Inc. v. DD Global Holdings LTD., 22-cv-03747, U.S. District Court, Southern District of New York (Manhattan).



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