SEC Investigating Tesla Over Complaint Over Solar Panel Defects, Company News

by Hyunjoo Jin

SAN FRANCISCO, Dec 6 (Reuters) – The Securities and Exchange Commission (SEC) has opened an investigation into Tesla following a complaint by a whistleblower that the company failed to properly inform its shareholders and the public for several years of the fire risks associated with defects in solar panel systems, according to a letter from the American stock market policeman.

The investigation is increasing pressure on the world’s most expensive automaker, which is already under federal investigation over crashes involving its driver assistance software. While the American giant has already been accused of having caused fires, this is the first investigation opened by a financial market regulatory authority.

The SEC revealed the existence of an investigation into Tesla in response to a request from Steven Henkes, a former quality manager of the group who had alerted in 2019 on this subject.

“We have confirmed with the staff of the Division of Enforcement that the investigation whose documents you request is still active and ongoing,” the SEC said in a Sept. 24 response to Steven Henkes, declining its request to provide the documents in question. According to an SEC official, the letter should not be taken as an indication by the agency that violations of the law had occurred. Reuters independently confirmed that the letter was indeed from the SEC.

Steven Henkes, also a former head of Toyota Motor’s quality division, was fired by Tesla in August 2020. He filed a lawsuit against Tesla claiming his dismissal was retaliatory after he raised safety concerns . Tesla did not respond to questions posed by Reuters via email, and the SEC declined to comment.

As part of the SEC filing, Steven Henkes said Tesla and SolarCity, the company the automaker acquired in 2016, failed to disclose their “liability and exposure to property damage, risk of user injury , fires, etc. to shareholders” before and after the acquisition.

Tesla also failed to inform customers that faulty electrical connectors could cause fires, the documents say.

The American group has told consumers that the company must perform maintenance on the solar panel system in order to avoid a failure that could cause the system to shut down. It did not warn of fire hazards, offer temporary shutdowns to mitigate risk, or report issues to regulators, Henkes said.

Tesla shares fell 5.5% to $960.25 on Monday following the information from Reuters. (Report Hyunjoo Jin, with Chris Prentice in Washington and Shreyashi Sanyal in Bangalore; French version Anait Miridzhanian, editing by Jean-Michel Bélot)


Leave a Comment