SEC Subpoenas Faraday Future Executives

Matt Posky
by Matt Posky
sec subpoenas faraday future executives

Several executives from perpetual automotive startup Faraday Future have reportedly been subpoenaed by the U.S. Securities and Exchange Commission as part of an investigation into inaccurate statements made to investors. Though, considering the nameplate’s history, it would be impossible to assume which item the SEC will be focusing on thanks to FF’s exceptionally long history of industrial misgivings.

We’ve covered Faraday Future’s long and bizarre story from the early days of delivering half-baked, though otherwise impressive, concepts to its more recent status as an automaker in the ethereal sense. It’s promised the moon and only managed to deliver a handful of production husks that never surpassed the body-in-white phase and some “production-intent” prototypes of the FF91. Though the larger story is the SEC’s sudden interest in electric vehicle startups that went public via mergers with blank check firms, better known as special purpose acquisition companies (SPACs), over the last two years.

Starting in 2019, SPACs became all the rage for burgeoning EV firms hoping to shore up a lot of capital by going public. But criticisms began to emerge after exceptionally high valuations failed to result in the companies moving forward as promised. Many would-be automakers started walking-back promises, became embroiled in unfavorable reporting (often by Hindenburg Research), or confessed to exaggerating the status of promised technologies and production capabilities. As a result, the Securities and Exchange Commission has launched investigations into numerous companies — including Lucid Group and Lordstown Motors.

Faraday is just the latest in a growing number of automotive startups that are now under investigation. But its troubles stretch all the way back to its founding in 2014, when nobody could get a clear sense of its management structure or where its funding was coming from. By 2017, the company saw itself backing out of a planned factory in North Las Vegas due to financial constraints. This was followed by several contractors claiming FF owed money, several management shakeups, rolling layoffs, and its majority shareholder/founder (Jia Yueting) getting into trouble with Chinese regulators stemming from the dealings of his other companies — some of which were curiously involved with FF. Financial problems persisted and he declared bankruptcy in Delaware in 2019 and the Central District of California in 2020 after refusing to return to China.

However Faraday Future spent the majority of its time fundraising, receiving numerous investments as it perpetually seemed to be on the cusp of a major production breakthrough. This included $854 million from Evergrande Group, in exchange for a 45-percent stake in the company. But the deal went sideways almost immediately after it was penned in 2018. A year later, FF announced a new 50/50 joint venture with Chinese online game operator The9 to make EVs in China — though nothing seems to have come of it. In July of 2021, Faraday became a publicly-traded company after merging with a SPAC known as Property Solutions Acquisition Corp.

This is the arrangement that ultimately alerted the SEC, which the company has confirmed recently subpoenaed some members of Faraday Future Intelligent Electric Inc’s management team as part of an investigation hoping to determine the accuracy (or inaccuracy) of statements made to investors. Reuters appears to have reported on the matter first, with the company confirming the details shortly thereafter.

From Reuters:

An internal review had in February identified certain inaccurate statements and the company cut the base salaries of its Chief Executive Carsten Breitfield and founder Jia Yueting, asking them to report to newly appointed Executive Chairperson Susan Swenson.

The review by a special committee formed in November, however, rejected claims made by a short-seller that called the startup “a new EV scam in town”, saying they were not supported by the evidence reviewed.

The startup said on Thursday it would miss the deadline for filing its 2021 annual report due to delays caused by the internal investigation. It had previously delayed the filing of its quarterly report in November.

The review also decided that the company’s declaration that it had received over 14,000 reservations for the FF91 vehicle was potentially misleading due to only a few hundred of those reservations actually having any real money behind them. The rest were simply unpaid indications of interest, rather than formal reservations. The resulting fallout has seen numerous top-level executives receive cuts to their compensation, move to other roles within Faraday Future, or simply leave the company. For what it’s worth, the EV startup has said it will continue to implement the “appropriate remedial actions” approved by the internal review committee and is continuing with its own investigation.

[Images: Faraday Future]

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  • Dukeisduke Dukeisduke on Apr 01, 2022

    In the interest of transparency, they should have just called themselves "Faraday Never".

  • Dukeisduke Dukeisduke on Apr 01, 2022

    Matt, are you guys going to put up an article today on the latest Ford recall (737k vehicles)? It's about oil leaks and resulting fires in Escapes and Bronco Sports with the 1.5l four, and a software problem with trailer brake controllers on 2021-22 F-Series, and 2022 Mavericks, Expeditions, and Navigators.

  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Ed That has to be a joke.