SEC Subpoenas Faraday Future Over Inaccurate Statements To Investors
Faraday Future Intelligent Electric Inc. is the latest EV startup to come under scrutiny from the U.S. Securities and Exchange Commission (SEC). The organization said it is probing the would-be automaker for inaccurate statements made to investors.
The SEC is, specifically, investigating some of the company’s management team, Faraday Future said, per Reuters. The EV startup came under scrutiny after a short-seller called it the “new EV scam in town.”
That triggered an internal investigation for the company, which admitted to inflating reservation numbers for its upcoming vehicle, the FF 91. The company claimed to have 14,000 reservations for the electric vehicle when, in reality, only a few hundred of those were paid, the rest were “unpaid indications of interest.”
The investigation also found that the company was dishonest about Yueting Jia‘s role in the company. It found that “Mr. Jia’s involvement in the management of the company […] was more significant than what had been represented to certain investors.”
Faraday Future, though, refuted “allegations of inaccurate disclosures […] including those made in the short-seller report,” stating that they were not “supported by the evidence reviewed.”
The company will, however, hire a chief compliance officer and implement a comprehensive training program for all directors and officers regarding internal company policies, among other things. Its general counsel, meanwhile, has separated from the company and its VP of global capital markets has been suspended without pay. Jia and CEO Carsten Breitfeld had their salaries cut by 25 percent and Susan Swenson was named executive chairperson of the company.
Faraday Future is just one of a number of EV startups that have been called out by short-sellers and investigated by the SEC. Other American companies like Nikola and Lordstown Motors have also been investigated by the commission.
Earlier this month, the company unveiled its production-intent FF 91 and started dynamic testing on the vehicle.