Shares of NuScale Power (NYSE:SMR) are plunging nearly 15% lower after Hunterbrook Capital reported that the SEC’s Division of Enforcement is conducting an investigation into the company. Hunterbrook was short SMR as of June 11 but says its investment arm does not have a position in the company today.
Hunterbrook says it filed a Freedom of Information Act (FOIA) request on May 28, asking for “[any investigations] or inquiries that directly pertain to the conduct, disclosures, and/or transactions of the registrant NuScale Power from January 1, 2023.”
The SEC responded on June 27, noting that it denied Hunterbrook’s request under FOIA Exemption 7(A). This exemption allows the withholding of information if it would interfere with enforcement proceedings. The SEC also stated that it doesn’t confirm or deny the existence of an investigation unless it is already public knowledge. Hunterbrook appealed the decision.
In response, the SEC stated that “We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing.”
SMR Stock: Hunterbrook Alleges NuScale SEC Investigation
Ultimately, the SEC maintained that Exemption 7(A) applied to this FOIA request and did not share relevant documents with Hunterbrook. It added that the existence of an investigation does not mean that NuScale has violated any laws.
“Hunterbrook is a known short-seller that has a vested interest in sensationalizing information to manipulate the stock market,” said NuScale in a response to Seeking Alpha. “We are unaware of any SEC investigation into NuScale or any reason for such an investigation.”
As of July 15, SMR stock had surged 404% higher in the year to date. The company focuses on nuclear energy and has been a beneficiary of artificial intelligence hype, stating that it could help meet the energy demand for data centers. Since then, it has fallen by about 45%.
Despite over a decade of research, Hunterbrook alleges that NuScale has failed to commercialize any nuclear reactors. During the first quarter, the company posted revenue of $1.4 million and a net loss of $48.1 million. The company also shared that it implemented a 28% workforce reduction.
Hunterbrook also alleges that the U.S. Nuclear Regulatory Commission (NRC) sent NuScale a request for more information on how it would mitigate risk on its design for its reactor technology. NuScale had previously stated that a plant utilizing this technology was “near-term deployable.”
“The NRC staff is unable to find evidence to conclude that the applicant implemented a risk-informed process,” said the agency.
In response to Hunterbrook, NuScale said that NRC information requests are a routine practice and that it is “misleading” to view them as a signal of a certain outcome. It added that it expects to hear back from the NRC by July 31, 2025.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
