According to Reuters, the US securities regulator has launched an investigation into Tesla because it failed to properly notify its shareholders and the public about the fire risks associated with solar panels. Documents from the U.S. Securities Regulatory Agency show that Tesla has been investigating because it has received complaints and allegations from whistleblowers.

According to the allegations, Tesla failed to properly notify shareholders and the public that its solar panels (components) were defective, which might pose a risk of fire. The whistleblower is Steven Henkes, the former quality manager of Tesla, who transferred to SolarCity as a quality engineer in 2016.

Steven Henkes said that Tesla and SolarCity did not disclose to shareholders before and after the acquisition that their solar panels have the potential to cause property damage, user injury risks, and even fire risks. In addition, Tesla also failed to notify its customers that a defective connector may cause a fire.

Tesla indicated in the consumer notification that it needs to maintain the solar panel system to avoid malfunctions that may cause the system to shut down. But Henkes said that Tesla did not warn consumers of the risk of fire on the panels, nor did it report the problem to regulators.

The SEC has previously issued concerns about Tesla's solar system fire, but this is the first related investigation report it has released.

After the news was announced, Tesla fell 6.4% to $950.50 in early New York trading. This is a 23% drop from the record closing high of $1229.91 set a month ago.

According to report, concerns about Tesla connector failures and Tesla solar system problems can be traced back to a few years ago. Wal-Mart claimed in its lawsuit against Tesla in 2019 that the latter’s rooftop solar system caused seven store fires. Tesla denied these allegations, and the two parties finally settled.

According to documents provided by PlainSite, a legal transparency organization, some residential customers or their insurance companies have sued Tesla and component supplier Amphenol for fires related to solar energy systems.

Henkes also filed a complaint with the US Consumer Product Safety Commission, and the media reported this year that the commission is investigating the case.

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