The U.S. Securities and Exchange Commission (SEC) is investigating Tesla after receiving a whistleblower disclosure about solar panel defects, according to new reporting.
The whistleblower, Steven Henkes, filed the disclosure to the SEC in 2019. Henkes, a former Tesla field quality manager, alleges that Tesla failed to properly disclose to shareholders and the public fire risks associated with solar panel system defects.
Henkes’ disclosure centers around Tesla’s alleged misconduct around the acquisition of SolarCity, a solar energy company, in 2016. According to Reuters, Henkes alleges that Tesla “did not disclose its ‘liability and exposure to property damage, risk of injury of users, fire etc to shareholders’ prior and after the acquisition.” Henkes further alleges that the company did not warn consumers of defective electrical connectors that could lead to fires.
The SEC confirmed its investigation in response to a Freedom of Information Act (FOIA) request filed by Henkes. “We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing,” the SEC wrote in response to Henkes’s FOIA request, according to Reuters. The SEC notes that this does not confirm that any violation of law occurred.
Henkes was fired from Tesla in 2020. He claims his termination was in retaliation for raising safety concerns. The news about the SEC investigation comes days after Tesla founder Elon Musk sent out tweets making light of whistleblowers. In an op-ed for WNN, National Whistleblower Center Executive Director Siri Nelson explains that Musk’s tweets are a form of whistleblower retaliation aimed at deterring future whistleblowers from coming forward.
Through its whistleblower program, the SEC has been highly successful at incentivizing whistleblowers to come forward with information on securities violations. In the 2021 fiscal year, the SEC received a record 12,200 whistleblower tips. Qualified SEC whistleblowers are entitled to an award of 10-30% of the funds recovered by the government in connection with their disclosure. The SEC has awarded approximately $1.2 billion to 236 individual whistleblowers.