The US Securities and Exchange Commission is investigating Tesla Inc (NASDAQ:TSLA). over claims that the electric car maker did not properly notify its shareholders and the public of fire risks associated with defects in its solar panels over several years, according to a report by Reuters.
The investigation was disclosed as a result of a Freedom of Information Act request by Steven Henkes, a former Tesla field quality manager, who filed a whistleblower complaint about the solar panels in 2019 and asked the SEC for information about the report.
The agency declined Henkes’ request to see the records but said in a letter: "We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing."
The SEC said the letter should not be taken as an indication by the agency that violations of law had occurred.
Reuters said it had independently confirmed that the SEC letter was legitimate.
Concerns about fires from Tesla solar systems have been published previously, but this is the first report of investigation by the securities regulator.
Henkes was fired from Tesla in August 2020 and sued the automaker, claiming the dismissal was in retaliation for raising safety concerns.
In the SEC complaint, Henkes said Tesla failed to notify its customers that defective electrical connectors could lead to fires.
Henkes said he told Tesla's management that the company needed to shut down the fire-prone solar systems, report to safety regulators and notify consumers. When his calls were ignored, he filed complaints with regulators.
Henkes also filed a complaint with the US Consumer Product Safety Commission, which CNBC reported this year was investigating the case.
Reuters said Tesla did not respond to its emailed questions, while the SEC declined to comment.
Litigation and concerns over faulty connectors and Tesla solar system issues stretch back several years. Walmart took legal action against Tesla in 2019, claiming the latter's roof solar system had led to seven store fires. Tesla denied the allegations and the parties settled.
Tesla shares fell by around 6% on Monday following the Reuters report. They were 3.17% higher at US$1,040.22 in pre-market trade on Tuesday.