TuSimple Faces Big Lawsuit: Misled Investors About Safety of Tech

TuSimple Settles $189 Million Fraud Lawsuit

TuSimple, a self-driving truck company based in San Diego, has agreed to pay $189 million to settle a lawsuit. The lawsuit claimed that the company misled its investors about the safety of its technology and did not disclose that three insiders controlled a Chinese trucking competitor named Hydron.

Details of TuSimple Settlement

The preliminary settlement was filed on Monday in a San Diego federal court. It still needs approval from a judge. As part of the agreement, TuSimple has put $174 million into an escrow account, and its insurers have added another $15 million. Despite settling, the company and all other defendants, including its founders, executives, and bank underwriters, denied any wrongdoing.

The lawsuit came after shareholders accused TuSimple of exaggerating how safe its self-driving technology was before its initial public offering (IPO) in April 2021. They claimed the company focused more on sending improved technology to its Chinese rival than on ensuring safety on U.S. roads.

Background and Implications

Concerns about TuSimple’s safety practices became public in August 2022. The Wall Street Journal reported that one of the company’s self-driving trucks was involved in a crash on an Arizona freeway four months earlier. This incident highlighted worries among analysts and employees about the company’s push to release driverless trucks before they were safe.

The company initially went public with a $40 per share price and raised $1.35 billion in its IPO. However, the company delisted from Nasdaq in January 2024. It now trades over-the-counter on the Pink Sheets at just 20 cents per share.

Legal Fees and Future Steps for TuSimple

The lawyers representing the shareholders might ask for up to 25% of the settlement amount, or around $47 million, for their fees. The final settlement still needs a judge’s approval.