The Securities and Exchange Commission (SEC) has filed fraud charges against Ideanomics and several of its executives. All respondents have settled with the SEC.
Ideanomics (OTC:IDEX) is described as “a global group with a simple mission: accelerating the commercial adoption of electric vehicles. By bringing proprietary vehicle and charging technologies together, we simplify the transition and operation of EV fleets.”
Ideanomics trades on OTC Markets and is a microcap with a valuation of under $10 million. It previously traded on the NASDAQ.
Ideanomics and its former Chairman and CEO, Zheng (Bruno) Wu, were charged with misleading the public about the company’s financial performance between 2017 and 2019.
The SEC also said it has settled charges against Ideanomics’ current CEO, Alfred Poor, and former CFO, Federico Tovar, for their roles.
The SEC’s orders allege that, in mid-November 2017, Ideanomics and Wu reported 2017 revenue guidance of $300 million, while knowing they would not achieve this target. The company reported $144 million in revenue for the year.
The SEC also alleges that Ideanomics and Wu misled the company’s auditor with a fraudulent letter of intent from a purportedly interested buyer of certain assets to avoid writing down those assets by $17 million in 2017. Wu is said to have improperly hidden his personal interest in two companies that received millions in cash and stock from deals with Ideanomics between 2017 and 2019.
The SEC also claims that Ideanomics, Wu, Poor, and Tovar improperly accounted for a deal involving crypto in 2019, resulting in the company’s overstatement of revenues by more than $40 million, and made false representations in company financial statements alleging in fraud.
Ideanomics, at one point, claimed to hold crypto that it allegedly said could be turned into cash; however, the firm never had the keys for the wallet where the tokens were held. The SEC order claims the crypto was owned by another company. The convoluted deal was in regard to an agreement where Ideonomics would assist the counterparty with developing and marketing the token, and in return, Ideonomics would receive tokens in advance.
The SEC’s order against Wu finds that he violated the antifraud, reporting, internal control, and books and records provisions of the federal securities laws and caused certain of the company’s violations.
The SEC’s order against Ideanomics, Poor, and Tovar also finds that Ideanomics violated the antifraud, reporting, internal control, and books and records provisions of the federal securities laws, and it finds that Poor and Tovar violated the antifraud, reporting, and books and records provisions and caused certain of the company’s violations.
Without admitting or denying the SEC’s findings, all respondents settled the matter by agreeing to cease and desist from future violations of the charged provisions.
Wu has agreed to pay more than $3.3 million in disgorgement and prejudgment interest and a $200,000 penalty.
Tovar and Poor each agreed to pay a $75,000 penalty.
Ideanomics agreed to pay a $1.4 million penalty and to retain an independent compliance consultant to review, assess, and make recommendations as to the company’s internal accounting controls.
Wu has also agreed to a ten-year officer and director bar, and Tovar agreed to be suspended from appearing and practicing before the SEC as an accountant for at least two years.