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SEC reportedly investigating Tesla over its solar panels’ potential fire risks

The US Securities and Exchange Commission (SEC) is looking into a claim that Tesla didn’t appropriately inform its shareholders and the public about potential fire risks that its solar panel systems may pose, according to a report by Reuters.

This comes after Steven Henkes, a former field quality manager at Tesla, filed a whistleblower complaint against the company in 2019. The SEC probe was made public following Henkes’ request for information about his report, through the Freedom of Information Act (FOIA). Reuters obtained a copy of the SEC’s response to Henkes, dated September 24th, that declined his request but stated: “We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing.” As confirmed by Reuters, an SEC official also noted that the letter doesn’t imply that there was any legal wrongdoing.

Henkes claims that Tesla and SolarCity, which Tesla acquired in 2016, failed to warn customers and shareholders about the fire risks associated with the solar panel systems’ defective electrical connectors. The complaint alleges that Tesla misled customers by telling them the company simply had to conduct maintenance on the systems, rather than informing them about the potential fire risks.

Henkes says he told Tesla management that the company should shut down the defective systems, notify customers, and inform the proper authorities. Tesla fired the former field quality manager in 2020, and he believes the move was done in retaliation. Henkes has since filed a wrongful termination lawsuit in response.

Safety issues associated with Tesla’s solar panels arose in 2019 when Walmart sued Tesla, blaming the company’s solar panels for starting fires in several Walmart stores. The retail giant claimed that the solar panels were defective — some of which were allegedly installed by SolarCity prior to its acquisition — and that Tesla failed to ground the systems properly. However, Walmart dropped the lawsuit later that year, saying that the two companies had come to an agreement.

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“The SEC does not comment on the existence or nonexistence of a possible investigation,” an SEC spokesperson told The Verge.

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