FuelCell Energy Ordered Cease-and-Desist after Self-Reporting Securities Industry Violations to SECTuesday, September 15, 2020
On September 3, 2020, the Securities and Exchange Commission (SEC) instituted cease-and-desist (C&D) proceedings against FuelCell Energy, Inc. (FuelCell), for violations of securities industry rules. FuelCell is a publicly-traded company based in Connecticut that designs, manufactures, installs, and services fuel cell power plants.
According to the SEC, FuelCell failed to satisfy its prospectus delivery obligations to investors in connection with five public offerings on the Nasdaq Global Market through National Financial Services, LLC (NFS) from 2005 to 2017. Through NFS, FuelCell sold over 70 million stock shares totaling over $148 million through at-the-market delayed shelf offerings, which provided the flexibility to register the offerings without issuing or offering the securities for sale immediately. With delayed offerings, FuelCell was required under certain securities industry rules to provide a “base prospectus,” but when they began selling them into the market, they were required to disclose required information that was previously omitted. Without a final prospectus, the market and its investors may not have known the quantity of securities in each offering or that FuelCell had commenced the public offerings.
Based on the foregoing, FuelCell violated Section 5(b)(2) and Section 10(a) of the Securities Act by failing to deliver the final prospectuses to its investors. FuelCell asserts that the outside securities counsel it hired to help prepare and file its registration statements for the public offerings said it did not need to file prospectus supplements. FuelCell claims that once it hired its first general counsel in January 2018, its counsel informed FuelCell of these violations and FuelCell subsequently self-reported its violations to the SEC.
FuelCell submitted an Offer of Settlement in anticipation of the C&D Order. Due in large part to its cooperation and self-reporting, the SEC ordered FuelCell cease and desist from committing or causing any violations and any future violations of Section 5(b)(2) of the Securities Act without imposing monetary sanctions.
If you invested in FuelCell Energy (FCEL) and lost money, you may be able to recover your losses from the broker who recommended it. Call us (1-877-410-8172) for a free consultation.