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Investing.com -- Faraday Future Intelligent Electric Inc. (NASDAQ:FFAI) stock fell 9% after the company disclosed it received a Wells Notice from the U.S. Securities and Exchange Commission, signaling potential enforcement action against the EV maker.
The California-based electric vehicle company revealed that the SEC staff has made a preliminary determination to recommend enforcement action against the company, two current executives including Global President Jerry Wang and YT Jia, and two former employees. The potential charges relate to alleged violations of anti-fraud provisions of federal securities laws.
According to the company’s disclosure, the SEC’s concerns stem from purportedly false or misleading statements made during Faraday’s 2021 PIPE financing and SPAC listing. The allegations specifically focus on related party transactions and Mr. YT Jia’s role in the company.
The Wells Notice comes as Faraday announced it secured approximately $105 million in new cash financing, including $82 million in new financing commitments primarily through unsecured convertible notes and warrants. The company stated the funding would support the launch of its new FX Super One product and accelerate development of its FF and FX brands and AI-related technologies.
The financing is mainly funded by existing institutional investors, including Master Investment Group, the company’s Middle East strategic partner. The product launch for the FX Super One is scheduled for July 17, 2025.
A Wells Notice represents a preliminary determination by SEC staff and is not a formal charge of wrongdoing. Faraday Future indicated it plans to engage with the Commission about why an enforcement action is not warranted, while maintaining its commitment to its "Shareholder First" principle.
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