Fluence Energy, Inc. (FLNC) Investigation

Fluence Energy is facing increased scrutiny regarding the propriety of its financial reporting after revealing that the Securities and Exchange Commission has opened a formal investigation. The probe was triggered by allegations of accounting irregularities made by activist short seller Blue Orca Capital in February.

In a regulatory filing on August 7, Fluence disclosed that the SEC is seeking information related to its financial reporting and the company’s internal investigation into the claims made by Blue Orca.

On February 22, 2024,  Blue Orca Capital’s released an investigative report accusing Fluence of artificially inflating revenue and profits through aggressive accounting tactics, including revenue recognition schemes and selective earnings adjustments. Blue Orca’s report stated, “[i]n our opinion, Fluence’s purported improvement over recent quarters is the product of accounting games that have materially inflated revenue growth and Adj. Gross Margins, which we think helps to explain why Fluence is on its third CFO in just over two years.”

Blue Orca expounded, “we believe that much of Fluence’s sales and earnings growth can be attributed to aggressive revenue pull-forwards and selectively applied earnings adjustments[]” and “[w]e estimate that the Company inflated its LTM sales growth from 58% to over 80% in Q1 FY 2023 simply by rewriting of  customer contracts that allowed it to recognize revenue on customers in advance of product installation.” The firm also said that “selective earnings adjustments inflated its incremental Adj. EBITDA by 40% in FY23, and its Adj. Gross Margin from 3.9% to 6.6%.”

Fluence, while not directly addressing the specific accounting allegations, has previously stated that its audit committee conducted an internal investigation, assisted by outside counsel and forensic accountants, in response to the short-seller report. While the company has pledged full cooperation with the SEC's inquiry, it has cautioned that the potential outcome and costs of the investigation are uncertain.

The SEC investigation brings additional uncertainty to Fluence, which has seen its stock price decline sharply following the release of the Blue Orca report. This has prompted prominent shareholder rights firm Hagens Berman to renew its investigation of whether Fluence may have violated U.S. securities laws.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the FLNC investigation about?

We are looking into whether Fluence inaccurately reported its financial performance to investors.

WHAT SHOULD I DO?

I worked at FLNC. What should I do?

If you were an employee of FLNC, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in FLNC, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any FLNC investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.