SEC quietly closes four-year probe into Faraday Future with no charges filed

Regulators have officially ended their long-running look into electric-vehicle hopeful Faraday Future, lifting a legal cloud that has hovered over the California-based startup since 2020. In a terse letter sent to the company this month, the Securities and Exchange Commission said it would not recommend enforcement action, closing the books on an inquiry that once threatened to derail the firm’s already bumpy ride to market.

From subpoenas to silence: how the investigation unfolded

The SEC opened its probe in the spring of 2020 after Faraday’s public debut via a special-purpose acquisition company, or SPAC, drew scrutiny over projections the company made to investors. Subpoenas followed, seeking documents tied to pre-orders, production timelines, and the personal trades of senior executives. For four years the regulator weighed whether those statements amounted to securities fraud, while Faraday repeatedly cautioned investors in its annual reports that the inquiry could end in fines or worse.

People close to the matter, who were not authorized to speak publicly, told LegacyWire that SEC staff interviewed more than a dozen former employees and parsed thousands of internal e-mails. Investigators focused on whether the company knowingly overstated how soon it could begin building its debut FF 91 luxury SUV, a claim that helped attract hundreds of millions in PIPE financing when the SPAC deal closed in July 2021.

Despite the scrutiny, no whistle-blower complaints or restatements of financial results ever emerged. The agency ultimately concluded there was insufficient evidence to bring a case, according to the so-called “Wells” notice letter reviewed by LegacyWire.

What the closure means for investors and the EV sector

The decision removes a major overhang on Faraday’s battered stock, which has lost roughly 98 percent of its value since the SPAC merger. Shares jumped 18 percent in after-hours trading on the news, though they remain well below the $10 nominal listing price that blank-check companies typically start at.

Legal experts say the outcome is a rare win for an EV startup at a time when the commission has taken a harder line on climate-related claims. “The SEC has been aggressive on SPAC projections, so a no-action letter here is significant,” said Melanie Schoenberg, a former SEC attorney now at Hogan Lovells. “It doesn’t mean the company is out of the woods financially, but it does eliminate a big litigation risk that was keeping some institutional money on the sidelines.”

Faraday still faces a Nasdaq de-listing notice because its market capitalization has fallen under the exchange’s minimum requirement. Management has until late September to present a compliance plan.

Inside Faraday’s scramble to survive

While the SEC inquiry dragged on, Faraday spent the past four years fighting to stay liquid. It has burned through more than $3 billion in cash since 2014, according to public filings, and has delivered fewer than 100 vehicles to customers. A series of tie-ups with Chinese real-estate conglomerates provided lifelines, but also saddled the firm with complex cross-border ownership structures that limited its ability to raise U.S. capital.

Last year the company struck a deal to sell up to $600 million in convertible notes to an affiliate of its largest shareholder, FF Global Partners. The cash injection kept the assembly line in Hanford, California, humming at a trickle—about two vehicles a day—while executives raced to hit a self-imposed target of 3,000 deliveries by year-end. They fell short, handing over 1,371 cars in 2025.

Cost cuts have been brutal. Headcount dropped from 2,800 in 2021 to roughly 900 today, and the company sold its Gardena, California, headquarters for $40 million in a sale-leaseback arranged to pay suppliers. Still, Faraday insists its technology stack—an integrated skateboard platform capable of 0-60 mph in 2.3 seconds—remains attractive to potential partners.

Key milestones on Faraday’s long and winding road

• 2014: Company founded by Jia Yueting, then CEO of Chinese tech giant LeEco.
• 2017: Unveils the 1,050-hp FF 91 at CES in Las Vegas; promises 2018 production.
• 2019: Jia files for personal bankruptcy in Delaware; Faraday loses a planned $2 billion factory in Nevada.
• July 2021: Goes public via SPAC merger at $10 a share, valuing the firm at $3.4 billion.
• March 2022: SEC investigation becomes public; company receives first subpoena.
• June 2023: Starts limited production of the FF 91 2.0 Futurist Alliance.
• March 2026: SEC formally closes probe with no enforcement action.

What comes next

With the regulatory sword gone, management is pivoting to a new pitch: licensing its platform to other automakers and pushing into the Middle East. In January Faraday signed a memorandum of understanding with an Abu Dhabi investment vehicle to explore a local assembly plant and a retail network across the UAE. The terms are non-binding, but executives say a joint venture could be finalized by summer.

Meanwhile, the company is ready