Business

Exclusive: SEC investigates Tesla over whistleblowers allegations of solar panel defects




SAN FRANCISCO / WASHINGTON, December 6 (Reuters) – The US Securities and Exchange Commission has opened an investigation into Tesla Inc (TSLA.O) due to a whistleblower complaint that the company failed to notify its shareholders and the public about the fire risk associated with solar panels. system failure over several years, according to a letter from the agency.

The probe is increasing regulatory pressure on the world’s most valuable carmaker, which is already facing a federal safety probe in accidents involving the driver assistance systems. Concerns about fires from Tesla solar systems have been published previously, but this is the first report on an investigation by the Securities and Exchange Commission.

The US Securities and Exchange Commission unveiled the Tesla probe in response to a Freedom of Information Act request from Steven Henkes, a former Tesla field quality manager, who filed a solicitor complaint on solar systems in 2019, asking the agency for information on the report.

Sign up now for FREE unlimited access to reuters.com

“We have confirmed with the Department of Enforcement that the investigation from which you are seeking records is still ongoing and ongoing,” the SEC said in a response to Henkes on Sept. 24, rejecting his request to deliver the records. The SEC official said the letter should not be taken as an indication by the agency that a violation of the law had occurred. Reuters independently confirmed that the SEC letter was legitimate.

Henkes, a former quality department manager for Toyota Motor, was fired from Tesla in August 2020, and he sued Tesla, claiming that the dismissal was a retaliation for safety concerns. Tesla did not respond to email questions from Reuters, while the SEC declined to comment.

In the SEC complaint, Henkes said that Tesla and SolarCity, which they bought in 2016, did not disclose their “liability and exposure to property damage, risk of damage to users, fire, etc. to shareholders” before and after the acquisition.

Tesla instead failed to notify its customers that defective electrical contacts could lead to fire, according to the complaint.

Tesla told consumers that they had to perform maintenance on the solar panel system to avoid a fault that could turn off the system. It did not warn of fire risk, did not offer a temporary halt to reduce the risk, or reported the problems to regulators, Henkes said.

Shares of Tesla fell as much as 6.4% to $ 950.5 on Monday, the lowest level in more than two months, according to the Reuters report. Tesla’s share was ready to end the session down 20% from the record high closing on November 4, which confirms with a common definition that it is in a bear market.

SolarCity Trucks Shown in San Diego, California, USA, November 2, 2016. REUTERS / Mike Blake / File Photo

EX-TOYOTA QUALITY MANAGER BLOWS IN THE MOVE

More than 60,000 private customers in the United States and 500 public and commercial accounts were affected by the problem, according to his lawsuit filed in November last year against Tesla Energy for wrongful termination.

It is not clear how many of them remain after Tesla’s repair program.

Henkes, a longtime leader at Toyota’s North American quality division, moved to SolarCity as a quality engineer in 2016, months before Tesla acquired SolarCity. After the acquisition, his duties changed and he became aware of the widespread problem, he told Reuters.

Henkes, in the SEC complaint, said he told Tesla management that Tesla must shut down the fire-exposed solar cell systems, report to safety regulators and notify consumers. When his calls were ignored, he continued to file complaints to regulators.

“The top lawyer warned any communication of this issue to the public as a damage to Tesla’s reputation. To me, this is criminal,” he said in the SEC complaint.

Lawsuits and concerns about faulty connections and problems with the Tesla solar system go back several years. Walmart in a lawsuit against Tesla in 2019 said that the latter’s roof solar system led to seven store fires. Tesla denied the allegations and the two reconciled.

Business Insider reported Tesla’s program to replace defective solar panel parts in 2019.

Several private customers or their insurance companies have sued Tesla and parts supplier Amphenol (APH.N) for fires related to their solar system, according to documents provided by the legal transparency group PlainSite.

Henkes also filed a complaint with the U.S. Consumer Product Safety Commission, which CNBC reported this year investigating the case. CPSC and Amphenol did not respond to a request for comment.

Sign up now for FREE unlimited access to reuters.com

Reporting by Hyunjoo Jin in San Francisco and Chris Prentice in Washington; Additional reporting by Noel Randewich; Edited by Peter Henderson and Nick Zieminski

Our standards: Thomson Reuters Trust Principles.



Source link

Back to top button