Breaking: Fisker Under SEC Investigation – News and Updates Here
Breaking: Fisker Under SEC Investigation – News and Updates
Electric vehicle (EV) startup Fisker Inc. is now at the center of an investigation by the U.S. Securities and Exchange Commission (SEC), adding another layer of complexity to the company's already tumultuous situation.
SEC Subpoenas and Investigation
The SEC has issued multiple subpoenas to Fisker as part of its ongoing investigation, with the possibility of additional subpoenas in the future. These subpoenas, which are typically confidential, seek records or testimony and indicate that the SEC is probing potential violations of federal securities laws.
The investigation was revealed through recent court filings, including a U.S. Bankruptcy Court filing in Delaware, where Fisker filed for Chapter 11 bankruptcy protection on June 18. The SEC's filing does not specify the exact nature of the investigation but mentions that it could result in "future actions alleging violations of the federal securities laws".
Background and Context
Fisker's troubles began to escalate last year with the disappointing rollout of its Ocean SUV. Despite producing over 10,000 units, the company managed to deliver the vehicle to only a few thousand customers. This failure, combined with a gross margin loss of 35 percent in the fourth quarter of last year, led to significant financial strain. In response, Fisker laid off 15 percent of its workforce in March and attempted to shift to a direct-to-consumer sales strategy, which ultimately proved unsuccessful.
Financial and Operational Issues
The company has faced numerous financial and operational challenges, including a series of internal control issues. In late 2023, Fisker cycled through several chief accounting officers and was late in filing its third-quarter financial results with the SEC. This delay allowed the company's largest lender to exert pressure, contributing to Fisker's eventual bankruptcy. Former employees have also reported difficulties in maintaining accurate financial records, including a period where the company briefly lost track of as much as $16 million in customer payments.
Shareholder Lawsuits and Allegations
Fisker is currently a defendant in several shareholder lawsuits, including a class-action lawsuit and five shareholder derivative complaints. These lawsuits allege that key executives, including Chairman and CEO Henrik Fisker and his wife, Geeta Gupta-Fisker, who serves as the company's co-founder and chief financial and operating officer, violated their fiduciary duties and securities laws. Shareholders have expressed frustration over public statements made by Henrik Fisker that were seen as overly optimistic despite the company's declining fortunes.
SEC Concerns and Objections
The SEC has filed an objection to Fisker's proposed settlement plan with its creditors, citing concerns that the plan does not adequately protect the SEC's ability to pursue the company or other parties in its investigation. The commission is also seeking clarification on how Fisker plans to preserve its corporate records after the settlement plan is enacted, as it has not received a response to this inquiry.
Ongoing Bankruptcy Proceedings
Fisker's bankruptcy case continues to unfold, with the company working to liquidate its assets and settle with its creditors. The proposed settlement plan involves the establishment of two trusts: the Heights Trust and the Liquidation Trust. These trusts will manage various assets, including Fisker's intellectual property, foreign interests, and claims. However, the SEC's objections to the plan could complicate these proceedings.
As the investigation and bankruptcy proceedings continue, Fisker's future remains uncertain, with significant implications for its shareholders, employees, and customers.