The investigation by the Securities and Exchange Commission (SEC) into electric vehicle startup Faraday Future has come to a close, despite recommendations for enforcement action from SEC staff last year. JS has learned from sources familiar with the case that the SEC informed the company and individuals involved in the probe of its closure.
This development comes amidst a significant decrease in enforcement actions by the SEC, with only four cases initiated against publicly-traded companies in the 2025 fiscal year. The SEC did not respond to requests for comment on the matter.
The investigation into Faraday Future spanned nearly four years, focusing on allegations of “false and misleading statements” during the company’s public listing in a 2021 merger with a special purpose acquisition company (SPAC). Additionally, the SEC looked into claims that Faraday Future misrepresented the sales of its initial electric vehicles in 2023, as reported by former employee whistleblowers.
Multiple subpoenas were sent to the startup by the financial regulator, as indicated in regulatory filings from Faraday Future. Depositions of former employees and executives were also conducted by the SEC in 2024 and 2025.
In July 2025, Faraday Future disclosed that the SEC had issued “Wells Notices” to the company and several executives, indicating a recommendation for enforcement action by the agency. However, the recent closure of the investigation means that no action will be taken against Faraday Future or its executives.
The Department of Justice also made requests for information to Faraday Future following the initiation of the SEC investigation in 2022, though it is unclear if a full probe was ever opened by the DOJ.
It is uncommon for the SEC to refrain from pursuing enforcement action after issuing Wells Notices. A study conducted at the Wharton School in 2020 revealed that approximately 85% of targets who receive Wells Notices end up facing legal action from the SEC.
Faraday Future is just one of several electric vehicle startups investigated by the SEC in recent years. While most cases resulted in settlements, Faraday Future’s case has now been closed without enforcement action. The company’s journey from inception to public listing has been tumultuous, marked by financial challenges, leadership changes, and ongoing scrutiny from regulatory bodies.
As Faraday Future navigates the aftermath of the SEC investigation and works to sustain its business, the company faces challenges such as a warning from the Nasdaq regarding its stock price. Despite these obstacles, Faraday Future continues to explore new avenues, including the introduction of more affordable electric vehicles and a shift towards robotics and cryptocurrency ventures.
In conclusion, the conclusion of the SEC investigation into Faraday Future marks a significant milestone for the company, allowing it to focus on its strategic goals and future growth opportunities.