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TuSimple Terminates CEO Over Improper Ties to Chinese Firm

Published 10/31/2022, 11:49 AM
Updated 10/31/2022, 05:30 PM
© Reuters.  TuSimple (TSP) Terminates CEO Over Improper Ties to Chinese Firm
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By Michael Elkins

TuSimple Holdings Inc (NASDAQ:TSP) released a statement, Monday concerning the termination of CEO Dr. Xiaodi Hou. “The independent directors unanimously determined that it was necessary and in the best interest of the shareholders to terminate Xiaodi Hou. Fundamentally, we lost trust and confidence in Dr. Hou’s judgment, decision-making, and ability to lead the company as CEO. This decision, which was made in connection with an ongoing investigation that was initiated by our Board’s Audit Committee in July, was made independent of any media coverage.” — The Independent Directors of the Board of TuSimple.

Electric vehicle company TuSimple (TSP) announced today that the company’s board of directors has terminated Dr. Xiaodi Hou, the Chief Executive Officer, President and Chief Technology Officer of the Company, and removed Dr. Hou from his position as Chairman of the Board and as a member of the Government Security Committee, effective as of October 30, 2022.

The board has also announced that Dr. Ersin Yumer, TuSimple's Executive Vice President of Operations, has agreed to serve as interim Chief Executive Officer and President of the Company while TuSimple begins its executive search. Brad Buss, TSP’s Lead Independent Director, will be Chairman of the Board. The Board is also actively engaged in the search to add new independent members to the Board.

These actions have been taken following an internal investigation that found improper dealings and possible tech transfer to a Chinese firm led by TuSimple’s now-departed co-founder. The ongoing investigation led by the Audit Committee of the Board led the Board to conclude that a change of Chief Executive Officer was necessary.

TuSimple said in a regulatory filing Monday that based on an investigation by its board of directors, it believes some of its employees spent paid hours in 2021 working for Hydron, a Chinese startup developing autonomous hydrogen-powered trucks. Those employees shared confidential information with Hydron before a nondisclosure agreement was signed, TuSimple said.

"I would like to thank Xiaodi for his many contributions to TuSimple. His knowledge and vision have been invaluable to the development of TuSimple's industry-leading technology and the growth of the Company. As we look ahead, I am delighted that Ersin has agreed to help us shepherd the Company through the next phases of its development." said Brad Buss. "Transparency, good judgment and accountability are critical values to our Company. We take these values extremely seriously."

"I look forward to working with the Board and the talented TuSimple Team to continue to move the Company forward." said Dr. Yumer. He added, "The leadership team firmly believes in the benefits of our technology and is committed to the Company's commercialization roadmap."

The company’s relationship to Hydron is under investigation by the Federal Bureau of Investigation and the Securities and Exchange Commission.

TuSimple will release its third quarter 2022 financial results on Monday October 31, 2022, after the market closes.

Shares of TSP are down 42.31% in mid-day trading on Monday.

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