The Securities and Exchange Commission today announced settled charges against a California-based manufacturer of “smart” windows, View Inc., for failing to disclose $28 million in projected warranty-related liabilities to address a particular defect in its windows. The SEC decided not to impose civil penalties against View because the company self-reported the misconduct to the SEC, promptly undertook remedial measures, and cooperated with the staff’s investigation. The SEC also announced charges against View’s former CFO, Vidul Prakash, for his failure to ensure that the warranty-related liabilities were disclosed.
According to the SEC order, in a series of reports and statements filed with the SEC from December 2020 to May 2021, View disclosed warranty liabilities of $22 million to $25 million, consisting largely of projected costs to manufacture replacements for certain defective windows. However, View failed to include in its disclosures the additional cost to ship and install the new windows, which View had decided to cover and which therefore should have been disclosed under generally accepted accounting principles in the United States. Including those costs, View should have disclosed total warranty liabilities of $48-$53 million. As a result, the SEC order finds, View materially misstated its warranty liability for fiscal years 2019 and 2020 and the first quarter of 2021.
“We are committed to imposing remedies that both hold market participants accountable and deter future violations,” said Monique C. Winkler, Director of the SEC’s San Francisco Regional Office. “At the same time, as this resolution demonstrates, there are real benefits to parties that meaningfully cooperate with the SEC’s investigations, including reduced penalties or even no penalties at all.”
The SEC’s order finds that View violated negligence-based antifraud, proxy disclosure, reporting, books and records, internal accounting controls, and disclosure controls provisions of the federal securities laws. Without admitting or denying the SEC’s findings, View agreed to cease and desist from future violations of the charged securities laws.
The SEC’s complaint against Prakash charges him with violating negligence-based antifraud, proxy disclosure, and books and records provisions of the federal securities laws and seeks permanent injunctions, civil penalties, and an officer and director bar. The complaint was filed in the U.S. District Court for the Northern District of California.
The SEC’s investigation was conducted by Theis Finlev and Michael Foley and was supervised by Jason H. Lee, all of the SEC’s San Francisco Regional Office. The SEC’s litigation against Prakash will be conducted by Suzy LaMarca and Mr. Finlev.