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Self-driving trucking company TuSimple Holdings Inc. has agreed to pay $189 million to settle a class action lawsuit accusing it of misleading investors about its safety record and its relationship with a Chinese rival, which triggered U.S. government investigations. The settlement was disclosed in a filing Monday in a California federal court.

TuSimple Settles Fraud Lawsuit for $189M : Significant Recovery for Investors

The lawsuit, led by the Indiana Public Retirement System, was filed in August 2022 and claims that TuSimple’s stock value plunged by 98% following its $1.4 billion IPO in April 2021. The stock nosedive came after negative media reports surfaced about federal probes into the company’s business practices and a crash involving a TuSimple semi-truck. The settlement, pending court approval, would distribute the $189 million to investors who held shares between the IPO and December 2022.

Investor firms Robbins Geller Rudman & Dowd LLP and Kahn Swick & Foti LLC intend to seek attorney fees totaling no more than 25% of the settlement. The lawsuit's lead plaintiff described the settlement as "one of the most significant securities class action recoveries ever obtained" in the Southern District of California.

TuSimple Settles Fraud Lawsuit for $189M : Safety Concerns and Alleged Fraud

The lawsuit primarily revolved around the Arizona crash of a TuSimple self-driving truck, which was allegedly captured by a whistleblower and posted online in July 2022. The crash was used to support claims that TuSimple had exaggerated the safety of its autonomous vehicles, undermining investor confidence.

TuSimple, a company promoting itself as a leader in autonomous driving technology, had claimed that its artificial intelligence-powered trucks were safe and advanced. However, the Arizona accident cast doubts on these claims, prompting a sharp decline in stock value and increased scrutiny from federal regulators.

TuSimple Settles Fraud Lawsuit for $189M : Investigations Into Chinese Ties

In addition to safety concerns, the lawsuit also highlighted TuSimple’s undisclosed relationship with Chinese company Hydron Inc.. According to the complaint, TuSimple allegedly shared proprietary technology and intellectual property with Hydron, raising concerns about national security and potential violations of securities laws. The Federal Bureau of Investigation (FBI) and the U.S. Securities and Exchange Commission (SEC) launched investigations into the company's ties to its Chinese competitor.

The lawsuit argues that TuSimple failed to disclose these risks, resulting in a material misrepresentation to investors, contributing to the dramatic decline in its stock price.

TuSimple's Response and Delisting

In January 2023, TuSimple announced its decision to voluntarily delist from Nasdaq and revert to private company status. The company cited changing market conditions, including rising interest rates and a shift in investor sentiment towards pre-commercialization technology firms, as factors in its decision to go private.

Representatives for TuSimple and the class action plaintiffs did not immediately respond to requests for comment regarding the settlement.

Legal Representation and Case Details

The investor class is represented by Robbins Geller Rudman & Dowd LLP and Kahn Swick & Foti LLC, while TuSimple is represented by attorneys from Wilmer Cutler Pickering Hale and Dorr LLP and Procopio Cory Hargreaves & Savitch LLP.