Tesla Inc (NASDAQ:TSLA) is facing scrutiny by the Securities and Exchange Commission (SEC) over fire risks caused by alleged SolarCity’s solar panel defects. A whistleblower complained that the firm had not properly warned the public about the issue.
ulleo / Pixabay – Valuewalk
Q3 2021 hedge fund letters, conferences and more
As reported by Reuters, the investigation increases the pressure on the world’s most valuable car manufacturer, which is already under federal scrutiny over accidents involving its controversial driver assistant systems.
The news agency informs that concerns about fires from Tesla solar systems have been previously published, “but this is the first report of investigation by the securities regulator.”
The whistleblower is Steven Henkes, a former Tesla field quality manager, who filed a complaint on SolarCity’s solar systems two years ago. The SEC disclosed the Tesla probe in response to a Freedom of Information Act request by Henkes.
The Commission responded to Henkes’ request on September 24 by saying, “We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing.”
In his complaint to the SEC, Henkes said he had informed Tesla about the need to take down the fire-prone solar systems, notify safety regulators, and alert consumers. It was when his reports went overlooked that he decided to file complaints with regulators.
“The top lawyer cautioned any communication of this issue to the public as a detriment to the Tesla reputation. For me this is criminal,” Henkes said told the SEC in his complaint.
Tesla solar system panels have been the subject of controversy for several years. In 2019, Walmart Inc (NYSE:WMT) sued Tesla arguing that its roof solar system was partly responsible for seven store fires —back then, Tesla rejected the claims and reached a settlement with the retailer.
“Several residential customers or their insurers have sued Tesla and parts supplier Amphenol Corporation (NYSE:APH) over fires related to their solar systems, according to documents provided by legal transparency group PlainSite,” according to Reuters.
Tesla is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.