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FuelCell Under SEC Investigation Over PPP Loan Application
Probe centers on potential conflicts between FuelCell’s loan application and public financial disclosures.
January 21, 2021
On April 24, 2020, FuelCell Energy (FCEL) received a PPP in the amount of $6.5 million which is eligible to be fully forgiven if the company meets certain criteria. Two weeks after receiving the loan, the SEC’s Enforcement Division requested information from the company. The disclosure, also made in a previous filing, has been added to the FuelCell’s latest 10-K:

“On or about May 11, 2020, the Division of Enforcement of the SEC sent the Company an inquiry requesting that we voluntarily provide information to the SEC pertaining to our application and resulting PPP Loan and how the need for the PPP Loan compares with our filings, disclosures and financial condition. While this request for information is voluntary and the Company was not obligated to respond, we are cooperating and have provided information to the SEC.”

Though FuelCell is unprofitable, sales increased more than 100% in the quarter it received its PPP loan. The stock quadruped in 2020 and the company raised at least $305 million in two equity offerings. Though there’s no evidence the PPP loan was used inappropriately, the SEC’s request for information was made almost immediately after FCEL received the loan.

PPP fraud charges have been filed against 57 people thus far. The majority of the accused either lied about having legitimate businesses, or did not use the loan to pay workers as required. If FuelCell misrepresented its financial condition in its application or used the loan inappropriately, it may be exposed to the following risk:

“Making false statements to the SBA or a financial institution (18 U.S.C. § 1014) – A term of imprisonment of up to 30 years, a fine of up to $1,000,000, or both.”
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