SEC Charges “Smart” Window Manufacturer, View Inc., with Failing to Disclose $28 Million Liability

The Securities and Exchange Commission (SEC) has announced that it has reached a settlement with View Inc., a California-based manufacturer of “smart” windows, regarding charges of failing to disclose $28 million in projected warranty-related liabilities. The SEC decided not to impose civil penalties on View Inc. due to the company’s self-reporting of the misconduct, prompt remedial actions, and cooperation during the SEC’s investigation. However, the SEC has filed charges against Vidul Prakash, View’s former CFO, for his role in the failure to disclose the warranty-related liabilities.

According to the SEC order, View Inc. disclosed warranty liabilities ranging from $22 million to $25 million in reports and statements submitted to the SEC between December 2020 and May 2021. These liabilities primarily represented projected costs for manufacturing replacement windows to address a specific defect. However, View Inc. did not include the additional costs of shipping and installing the new windows in its disclosures, even though the company had decided to cover these expenses. Under generally accepted accounting principles in the United States, these additional costs should have been disclosed. Including these costs, View Inc. should have disclosed total warranty liabilities between $48 million and $53 million. The SEC order states that View Inc. materially misrepresented its warranty liability for fiscal years 2019 and 2020, as well as the first quarter of 2021.

Monique C. Winkler, Director of the SEC’s San Francisco Regional Office, stated, “We are committed to imposing remedies that both hold market participants accountable and deter future violations. 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 found that View Inc. violated various provisions of the federal securities laws, including negligence-based antifraud, proxy disclosure, reporting, books and records, internal accounting controls, and disclosure controls provisions. Without admitting or denying the SEC’s findings, View Inc. has agreed to cease and desist from future violations of the charged securities laws.

In the case of Vidul Prakash, the SEC has filed a complaint against him, charging him with violations of negligence-based antifraud, proxy disclosure, and books and records provisions of the federal securities laws. The SEC’s complaint 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 under the supervision of Jason H. Lee, all from the SEC’s San Francisco Regional Office. The litigation against Vidul Prakash will be conducted by Suzy LaMarca and Mr. Finlev.