The Securities and Exchange Commission (SEC) is reportedly investigating Tesla (TSLA), known for its electric vehicles, solar panels, and CEO, Elon Musk, over the company’s alleged failure to properly notify the public and its shareholders about the fire risks its solar panel systems posed. The SEC disclosed this investigation in a recent response to a whistleblower’s Freedom of Information Act request.
The whistleblower - Steven Henkes, a former solar field quality manager for Tesla who was fired by Tesla and has subsequently sued his former employer for retaliation - filed a whistleblower complaint alleging that Tesla and SolarCity, the solar panel company founded by Elon Musk’s cousins, failed to warn shareholders and customers about the solar panel systems’ fire risks due to defective electrical connectors.
Tesla not only faces this active SEC probe into its potentially defective solar panels, but also a lawsuit which Tesla shareholders have filed against Elon Musk and Tesla Board Members over the acquisition of SolarCity (the case is In re Tesla Motors, Inc. Stockholder Litigation, Delaware Court of Chancery, C.A. No. 12711-VCS). In 2020, Board Members Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Kimbal Musk, and Stephen Jurvetson, who were named in the lawsuit, settled with Tesla shareholders for $60 million plus $16.8 million in legal expenses and fees (the lawsuit against Elon Musk and other Tesla directors remains ongoing). News of the SEC investigation also follows the settlement and early resolution of a lawsuit Walmart had filed against Tesla in 2019 in New York County Supreme Court - Walmart Inc. (f/k/a Wal-Mart Stores, Inc. v. Tesla Energy Operations, Inc. (f/k/a Solarcity Corporation), Index No. 654765/2019 - over allegedly defective solar panels that were installed on the roofs of Walmart stores. Tesla is also the subject of a Consumer Product Safety Commission investigation into its solar panels.
About Faruqi & Faruqi, LLP
Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Georgia and Pennsylvania.
Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, direct purchasers, consumers and employees.
To schedule a free consultation with our attorneys and to learn more about your legal rights, call our offices today at (877) 247-4292 or (212) 983-9330.
Faruqi & Faruqi
New York office
Tel: (212) 983-9330
Fax: (212) 983-9331