Fisker Under SEC Investigation Amid Bankruptcy and Internal Control Issues

Electric vehicle manufacturer Fisker is currently under investigation by the Securities and Exchange Commission (SEC) for potential violations of federal securities laws, specifically related to the preservation of corporate records and documents during its Chapter 11 bankruptcy proceedings.

The SEC raised objections to Fisker’s bankruptcy plan, arguing that it fails to adequately safeguard the agency’s regulatory authority and its ongoing investigation into the company.

In a filing submitted on Friday in the U.S. Bankruptcy Court for the District of Delaware, the SEC expressed its concerns, stating that Fisker’s plan does not “adequately preserve the commission’s police and regulatory powers with respect to its pending investigation (including the preservation and production of corporate records) and possible future actions alleging violations of the federal securities laws.” The agency also confirmed that Fisker is facing multiple subpoenas in connection with the investigation.

Fisker, which filed for Chapter 11 bankruptcy in June 2023, has been entangled in a series of legal and financial challenges. Earlier this year, the company attempted to shift the costs of repairs related to safety recalls onto consumers. However, on Monday, the Department of Justice (DOJ) rejected this move, declaring it illegal under the National Traffic and Motor Vehicle Safety Act. In a filing with the bankruptcy court, the DOJ emphasized that manufacturers are “required to remedy vehicle defects or noncompliance, without charge to the consumer.” The National Highway Traffic Safety Administration (NHTSA) had referred the case to the DOJ.

Fisker’s financial troubles worsened in November 2023, when the company disclosed that it had discovered significant weaknesses in its internal control over financial reporting (ICFR).

This revelation followed the sudden departure of its chief accounting officer. The ICFR deficiencies forced Fisker to delay the release of its financial results for the third quarter of 2023.

As Fisker navigates its bankruptcy proceedings, these regulatory and internal control issues are likely to compound the challenges the company faces in its efforts to reorganize and recover.

By fLEXI tEAM