The SEC is now reportedly investigating SunEdison, one of the world’s largest renewable energy companies, according to the Wall Street Journal.
The investigation centres on whether SunEdison told the truth about how much cash it had on hand last fall when the company’s stock was in free fall.
SunEdison told investors it had $1 billion in cash to weather the storm.
The stock fell 23% in Monday’s after market trading session. It has fallen almost 96% since July.
SunEdison’s stock started plummeting last July after it announced it would acquire Vivint, a residential solar company. The terms of the deal, however, made investors suspect that the company’s cash position was not as secure as they thought.
For example, as part of the deal, SunEdison would force TerraForm Power, one of its subsidiaries known as a yieldco, to accept take-or-pay agreements. That means TerraForm would be required to purchase certain SunEdison solar projects or pay the company a fee.
This caught the ire of TerraForm Power shareholder, investor David Tepper of Appaloosa Management. He sued SunEdison over the deal at the end of last year.
It was only one of SunEdison’s many problems. Vivint eventually pulled out of the acquisition and is looking into legal action. Earlier this month, an internal committee admitted there were issues with the company’s accounting.
It also delayed its annual financial report.
So now the SEC is going to start asking what investors have been asking for months — how much cash does SunEdison have?
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