EV SPAC Faraday Future is restructuring leadership following review of inaccurate statements to investors

Faraday Future is revamping its board, cutting the pay of two top executives and suspending at least one other, following an internal investigation that determined employees made inaccurate statements to investors and that its “corporate culture failed to sufficiently prioritize compliance,” according to a regulatory filing.

Faraday Future, which has had a long string of controversies since its founding in 2014, became a publicly traded company in July 2021 after merging with Property Solutions Acquisition Corp. Trouble percolated just months later when a short seller report alleged that Faraday Future had made a number of inaccurate statements. An internal review conducted by a special committee of directors and which tapped the expertise of a forensic accounting firm and independent legal counsel soon followed.

The committee found that company employees understated the involvement of founder and former CEO Jia Yueting, who is now chief product officer. The review also determined that the company’s declaration that it had received more than 14,000 reservations for the FF 91 vehicle were potentially misleading because only several hundred of those reservations were paid. The remainder, which totaled 14,000, were unpaid indications of interest. The company’s internal controls over financial accounting and reporting also require an upgrade in personnel and systems, the reviewers found.

As a result, Sue Swenson, who was the audit committee chairperson, has been appointed to a new position of executive chairperson. She will have oversight of the senior executive leadership team and will continue to direct additional investigations and remediation.

CEO Carsten Breitfeld and Yueting will receive a 25% pay cut and report directly to Swenson. Brian Krolicki will step down from his role as chairman of the board and chair of the nominating and corporate governance committee and become a member of the audit and compensation committees of the board. Jiawei (Jerry) Wang, the company’s VP of Global Capital Markets, will be suspended without pay until further notice, effective immediately, and Jarret Johnson, general counsel and secretary, “will be separating from the company,” according to a regulatory filing.

The special committee also approved strengthening internal controls, including hiring a chief compliance officer and hiring of additional financial and accounting support.