Tesla solar panel whistleblower sparks SEC probe

Tesla is the subject of an investigation by the Securities and Exchange Commission tied to a whistleblower complaint about the possible risk of fire associated with solar panel system defects, Reuters has learned exclusively.

This investigation adds to a list of regulatory headaches for the world's most valuable auto company, which includes a federal safety probe into accidents involving its driver assistant systems. Concerns about fires from Tesla solar systems have been published previously, but this is the first report of investigation by the securities regulator.

The SEC disclosed the Tesla probe in response to a Freedom of Information Act request by Steven Henkes, a former Tesla field quality manager, who filed a whistleblower complaint on the solar systems in 2019 and asked the agency for information about the report.

In the SEC complaint, Henkes accused Tesla and SolarCity, which it acquired in 2016, of not disclosing before or after the acquisition a "liability and exposure to property damage, risk of injury of users, fire etc to shareholders".

He also told the SEC that Tesla failed to notify its customers or regulators that defective electrical connectors could lead to fires. Henkes was fired from Tesla in August 2020 and he sued Tesla claiming the dismissal was in retaliation for raising safety concerns.

Tesla did not respond to Reuters' emailed questions, while the SEC declined to comment.

Litigation and concerns over faulty connectors and Tesla solar system issues stretch back several years. Walmart in a 2019 lawsuit that was eventually settled blamed Tesla's solar system for seven store fires. Several residential customers or their insurers have sued Tesla and parts supplier Amphenol over fires related to their solar systems, according to documents provided by legal transparency group PlainSite.

Shares of Tesla fell in mid-day Monday trading.