The U.S. Securities and Exchange Commission has launched an inquiry against Tesla Inc following a whistleblower complaint that the firm failed to properly disclose shareholders and the public over several years about fire hazards connected with solar panel system flaws.
The SEC revealed the Tesla investigation in response to a Freedom of Information Act (FIA) request from Steven Henkes, a former Tesla field quality manager who filed a whistleblower complaint about the solar panels in 2019 and requested information about the report.
The investigation adds to the regulatory pressure on the world's most valuable car manufacturer, which is already under investigation by the federal government for incidents involving its driver assistance systems.
Concerns about Tesla solar panel fires have been raised earlier, but this is the SEC's first indication of a probe.
"We have confirmed with Division of Enforcement employees that the inquiry into which you seek documents is currently active and ongoing," the SEC wrote to Henkes on Sept. 24 in response to his request for access to its records.
The SEC stated that the letter should not be interpreted as a signal that the commission discovered legal infractions. Reuters independently verified the authenticity of the SEC letter.
A former Toyota Motor quality division manager, Henkes was sacked from Tesla in August of last year and filed a lawsuit against the company, alleging that he was fired in reprisal for voicing safety issues.
Henkes claimed in the SEC complaint that Tesla and SolarCity, which it purchased in 2016, failed to disclose their "liability and exposure to property damage and risk of user injury" prior to and following the buyout.
Tesla also failed to tell customers about the risk of fires caused by malfunctioning electrical wires, according to the complaint.
Tesla informed users that it needed to do maintenance on the solar panels to avert a system failure. It failed to warn of fire hazards, offer temporary shutdowns to lessen risk, or notify regulators of the problems, Henkes said.
Tesla shares were down as much as 6.4% to $950.5 on Monday, the lowest level in in two months, following the report.
Tesla's stock was on track to close the session down 20% from its record-high on Nov. 4, proving that it is in a bear market by popular definition.
Walmart sued Tesla in 2019 alleging that the latter's rooftop solar system was responsible for seven store fires. Tesla contested the charges, and the two parties reached an agreement.
