According to a court filing, Fisker Inc. may be the subject of an investigation by Wall Street’s top officer after receiving a summons from the Securities and Exchange Commission.
SEC subpoenas, which generally seek either records or evidence, are private, but a mention of the company’s demand for information was included in a U. S. Bankruptcy Court registration this week in Delaware, where the troubled manufacturer filed for Chapter 11 protection on June 18 under a large debt load. The processing provided no information about why the company issued the lawsuit, which was included in a list of continuing legal proceedings against Fisker.
As the company’s stock price has plummeted, owners have experienced huge inventory costs. In a pending investor class-action petition and five investor generic problems involving a significant decline in its share price next fall, Fisker is a plaintiff. Variant suits are brought by shareholders on behalf of the business and usually accuse officers or directors of crime.
Shaneeda Jaffer, a white-collar security attorney at Benesch in San Francisco, said that although it’s an “absolute chance” that Fisker is the goal of an inspection, the agency even issues summons to parties that might be able to provide data about different probes.
Or you might be the subject of an investigation if neither of those buckets have been specifically chosen. She said that businesses and individuals are subject to subpoenas from the SEC frequently.
SEC investigations can result in civil allegations or referrals to the Department of Justice for potential criminal investigations and possible charges if wrongdoing is discovered.
The organization’s office declined to say whether an investigation was being conducted, according to a spokesman. Fisker also declined to comment.
Henrik Fisker, an auto designer, founded Fisker in 2016 and is based in Manhattan Beach before moving to Orange County earlier this year. It went public in 2020 amid a surge of investor interest in electric vehicles, raising about$ 1 billion in capital, and was valued at close to$ 8 billion a year later.
Fisker’s stock reached an all-time high of$ 31.96 in March 2021 before dropping below$ 10 the next year and falling off a cliff late last year to under$ 2 a share. It currently trades for less than a penny.
It released its first SUV, the Ocean, last year, that was meant to compete with Tesla’s Model Y. However, it had trouble delivering the vehicles to customers and meeting production objectives at the contract manufacturer in Austria. The business reportedly had discussions with Nissan about building a pickup truck domestically this year, but they never came to an agreement.
The lawsuits similarly allege that Henrik Fisker, the company’s chairman and chief executive, his wife, Geeta Gupta-Fisker, the company’s co-founder and chief financial and operating officer, and others, including board members, violated their fiduciary duties and securities laws. The company declined comment.
A series of events that began with a news release from August 2023, in which Fisker claimed that the company would produce up to 23 000 Oceans that year, led to the allegations. However, it disclosed in November that in the third quarter it had built only 4, 725 of the vehicles, with 1, 097 delivered to customers.
Additionally, the business also disclosed in November that its third-quarter results would be delayed as a result of the company’s chief accounting officer’s resignation. When it released the results, Fisker said it had to make “material adjustments” to its financials and had identified a “material weakness in internal controls”. The company’s share price fell that month by more than half, to less than$ 2.
James Lucas, 52, a Fisker shareholder who said he lost more than$ 100, 000 investing in the company, said shareholders also are angry over a series of media appearances by Henrik Fisker during which he touted the company’s prospects, even as its fortunes declined.
” Many of the comments made by Henrik Fisker were those that had these kind of broad views about the number of vehicles that were going to be produced. Whether it was just a failure to execute, who knows”, said the L. A. County resident. You take senior managers ‘ word on a lot of things as an investor.
Lucas, who belongs to a Telegram group of Fisker investors, claims he has filed complaints with the SEC about Fisker citing a number of issues and believes other irate investors have also done so.
Prior to the release of the Ocean, Fisker bragged on CNBC on March 2023 that the company would profit from the first cars it shipped because its contract builder was Fisker. In the interview, he said,” I can just sit counting the cash,” which included a forecast that Fisker would sell 1 million cars by 2027.
One year later on March 1, Fisker told an interviewer on Bloomberg TV that the company would” conservatively” deliver 20, 000 to 22, 000 to a new dealer network it had decided to put together. We have a few dealers asking,” We think we can sell more cars than you’re offering us right now,” he said.
He also made a prediction to Yahoo Finance that day that he was confident that the share price would rise above$ 1 per share in order to avoid being delisted from the New York Stock Exchange. ” I feel very optimistic about our future”, he said. The shares were delisted the following month.
Fisker produced only somewhat more than 10, 000 vehicles before it filed for bankruptcy.
Henrik Fisker has suffered significant losses as a result of his company’s stock’s current trading price of less than one penny. However, he also sold about$ 20 million worth of stock in 2021, well before the steep decline.
Henrik Fisker was not speaking to the media, according to the company.
Given that secured debt holders and others with claims against the bankrupt company have a priority over common shareholders, Andrew Fiorella, a securities litigator in Cleveland and Benesch, said it was highly unlikely that Fisker shareholders would be able to recover their losses.
” There’s almost certainly going to be nothing left at the end of the day”, he said.
Fisker is not the only California startup electric vehicle maker to have issues as a result of a decline in sales that is at least partially attributable to a rise in interest rates, which has increased the cost of financing.
Rivian in Irvine and Lucid in the Bay Area, both of which went public in 2021, have also experienced sharp price drops as the enthusiasm for EVs has faded. However, each company has deep-pocketed institutional investors, and both are still operating.
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