Faraday future, an electric vehicle start-up that just completed the management restructuring last month, said that a recently completed internal survey found that its leadership did not show "commitment to maintaining integrity and ethical values" The company disclosed this "significant weakness" in its financial report in its third quarter 2021 10-Q statement submitted late last Friday. This is the deadline for Faraday to submit the document to the securities and Exchange Commission (SEC) in the future, otherwise it will face the risk of delisting from NASDAQ.
In April, after completing an investigation into fraud allegations, the start-up limited the role of Founder Jia Yueting, another vice president resigned and fired some non-executive employees. The internal investigation was launched at the end of 2021 after a short agency claimed that Faraday lied about its SUV reservations after merging with a special purpose acquisition company in the future.
In last Friday's document, Faraday future said that senior managers "failed to strengthen their compliance attitude and the need for internal control awareness on some governance, accounting and financial policies and procedures of FF." These errors resulted in "inaccurate and incomplete disclosure of certain relationships, arrangements and transactions."
Faraday did not explain which transactions it referred to in the future, nor did it respond to follow-up questions. According to an insider, this part is related to the inflow and outflow of Jia Yueting's funds in the company for many years.
Jia Yueting established a science and technology empire in China before moving to the United States in 2017. Documents submitted to the SEC, his personal bankruptcy records and other reports show that he often makes loans to Faraday's future from other companies controlled by him in China, the United States and offshore jurisdictions.
Faraday's future internal investigation concluded that some employees concealed "their relationship with some related parties and related entities after the business merger and failed to fully disclose relevant information, including but not limited to: related parties and corporate governance information related to PwC, the company's independent certified public accounting firm."
"In addition, some people failed to cooperate and concealed potentially relevant information related to the special committee's investigation," the company wrote in the document
Since the end of June last year, the stock price has fallen by about 90% to close at 16.52%.