SEC probes Tesla over whistleblower claims on solar panel defects

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  • The US securities regulator has opened an investigation into Tesla.
  • According to a letter from the agency, the case is over a whistleblower complaint that the company has failed to properly inform its shareholders and the public about fire risks associated with solar panel system defects over several years.
  • The investigation adds to regulatory pressure on the world’s most valuable automaker, which already faces federal safety investigations into accidents involving its driver assist systems.

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The US securities regulator has launched an investigation into Tesla over a whistleblower complaint that the company failed to properly inform its shareholders and the public about fire risks associated with solar panel system defects, according to a letter from the agency.

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The investigation adds to regulatory pressure on the world’s most valuable automaker, which already faces federal safety investigations into accidents involving its driver assist systems. Concerns about fires from Tesla Solar Systems have been published before, but this is the first report to be investigated by the securities regulator.

The US Securities and Exchange Commission disclosed the Tesla investigation in response to a Freedom of Information Act request by Steven Henkes, a former Tesla field quality manager who filed a whistleblower complaint on solar systems in 2019 and reported information from the agency. Asked. ,

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The SEC denied Henkes’ request to provide his records on September 24, saying, “We have confirmed with the Division of Enforcement Staff that the investigation you seek records from is still active and ongoing.” The SEC official said the letter should not be taken by the agency as an indication that there has been a violation of the law. Reuters was able to confirm the response.

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

In the SEC complaint, Henkes said Tesla and SolarCity, which it acquired in 2016, disclosed their “liability and property damage, risk of injury to users, risk of fire to shareholders, etc.” before and after the acquisition. did not do.

According to the complaint, Tesla also failed to inform its customers that a faulty electrical connector could result in a fire.

Tesla told consumers that it needed to perform maintenance on the solar panel system to avoid a failure that could shut down the system. Henkes said it did not warn of fire risks, did not offer a temporary shutdown to reduce the risk, or report problems to regulators.

According to their lawsuit filed against Tesla Energy in November last year over wrongful termination, more than 60,000 residential customers and 500 government and commercial accounts in the US were affected by the issue.

It’s not clear how many of them are left after Tesla’s treatment program.

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

In the SEC complaint, Henkes said he told Tesla management that Tesla needed to shut down fire-prone solar systems, report it to safety regulators, and notify consumers. When his calls went unheeded, he started filing complaints with the regulators.

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

The litigation and concerns over faulty connectors and Tesla solar system issues have gone on for many years. walmart in 2019 trial Against Tesla that the latter’s rooftop solar system set fire to seven stores. Tesla denied the allegations and the two settled.

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

Several residential customers or their insurers have sued Tesla and their parts supplier Amphenol over a fire related to their solar systems, according to documents provided by legal transparency group Plainsight.

Henkes also filed a complaint with the US Consumer Product Safety Commission, which Businesshala reported is investigating the matter this year. CPSC and Amphenol did not respond to requests for comment.

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