Faraday Future Under SEC Scrutiny After 3-Year Investigation
▼ Summary
– The SEC has issued Wells Notices to Faraday Future’s founder Jia Yueting and president Jerry Wang, signaling potential enforcement actions following a three-year fraud investigation.
– The investigation focuses on alleged false statements tied to Faraday Future’s 2021 SPAC merger, with possible penalties including fines, injunctions, or disgorgement.
– Former employees were deposed by the SEC, and internal probes revealed concerns about misleading investor statements and Jia’s undisclosed control over company finances.
– Jia was temporarily sidelined after the probe but later regained leadership amid board pressure, including death threats and a shareholder push by FF Global.
– Faraday Future delivered its first electric SUV in 2023, though whistleblowers claim the sales were misleading, while Jia was reinstated as co-CEO in 2024.
Faraday Future faces potential SEC enforcement actions following a three-year fraud investigation into alleged misleading statements made during its 2021 SPAC merger. The electric vehicle startup disclosed in regulatory filings that founder Jia Yueting and president Jerry Wang received formal notices from the Securities and Exchange Commission warning of possible legal consequences.
According to the filing, SEC staff determined that Faraday Future may have violated federal securities laws through inaccurate disclosures surrounding its reverse merger with a special purpose acquisition company. The agency could pursue civil penalties, injunctions, or financial restitution if it moves forward with enforcement. Company representatives stated they intend to contest the allegations, arguing no enforcement action is justified.
The investigation gained momentum after newly appointed board members raised red flags shortly after the company went public. An internal review uncovered concerns about undisclosed influence by Jia over corporate decisions and questionable financial transactions between Faraday Future and entities linked to the founder. These findings prompted the board to remove Jia from his leadership role temporarily, though he later regained control amid shareholder pressure.
Former employees familiar with the matter revealed that SEC investigators conducted multiple depositions in recent weeks, signaling heightened scrutiny. The probe, led by the commission’s Los Angeles office, has included subpoenas and cooperation from whistleblowers who allege the company fabricated early sales figures for its flagship electric SUV.
The situation escalated in 2022 when board members faced hostile takeover attempts and even death threats from factions aligned with Jia. A major shareholder group, FF Global, successfully pushed for leadership changes by offering financing deals contingent on board resignations. This upheaval coincided with Jia’s eventual reinstatement as co-CEO earlier this year.
While the Department of Justice previously opened a parallel inquiry, its current status remains unclear. Faraday Future continues operating despite mounting legal and financial challenges, though the SEC’s latest warnings suggest unresolved regulatory risks could further destabilize the embattled automaker.
(Source: TechCrunch)
