Benzinga | May 18, 2021 03:41AM EDT

Why EV Startup Canoo Is Facing A SEC Investigation

Electric vehicle startup Canoo Inc (NASDAQ:GOEV) is being investigated by the U.S. Securities and Exchange Commission, the electric vehicle startup's CEO told analysts in a post-earnings call.

What Happened: The Los Angeles, California-based company, which went public through a reverse merger with special purpose acquisition company Hennessy Capital Acquisition Corp, said the SEC has informed the company the current investigation is a fact-finding inquiry.

In a separate filing, the company revealed the investigation covers the merger company HCAC's IPO, operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics, along with a string of executive departures at the company.

Canoo said it learned of the investigation on April 29 and is cooperating with the investigation.

Why It Matters: The SEC investigation follows a string of executive departures and the loss of a key automotive deal. The electric vehicle startup last month named one of its largest investors and executive chairman Tony Aquila to the role of chief executive. Aquila replaced co-founder Ulrich Kranz, who resigned effective April 30.

Canoo had last year said it was in talks with ride-sharing company Uber Technologies Inc (NYSE:UBER) and others to supply its electric vehicles.

The company's first-quarter loss narrowed to $15.2 million compared to a loss of $30.9 million a year ago.

Price Action: Canoo shares closed 3.4% higher at $7.55 on Monday and were down 1% in extended hours.

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Photo: Courtesy of Canoo