Plug Power Reaches Settlement with SEC Over Financial Restatements

Plug Power Inc., a global leader in comprehensive hydrogen solutions for the green hydrogen economy, has recently announced the resolution of a civil administrative proceeding with the U.S. Securities and Exchange Commission (SEC). The settlement is related to the company's previous announcement on March 16, 2021, which stated that the financial statements in its annual reports on Form 10-K for 2018 and 2019, as well as its quarterly reports on Form 10-Q for 2019 and 2020, should no longer be relied upon.

As part of the settlement, Plug Power neither admits nor denies the findings but has agreed to a cease-and-desist order regarding Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act, and Rules 13a-1, 13a-13, and 13a-15(a)-(c) thereunder. The full SEC order can be accessed here.

In addition to the cease-and-desist order, Plug Power will pay a civil monetary penalty of $1.25 million. Furthermore, the company has committed to fully remediating its material weakness in financial reporting and disclosing the progress publicly within one year from the date of the order. If Plug Power is unable to remediate the material weakness by that deadline, an additional civil monetary penalty of $5 million will be due within 90 days.

The decision by the SEC to accept Plug Power's settlement offer takes into account the swift and comprehensive remedial actions taken by the company and its cooperation with the Commission. Plug Power initiated a remediation plan in 2021, which encompasses several key measures to address and rectify the issues raised by the SEC. These measures include:

1. Hiring Additional Resources: Plug Power hired approximately 60 new employees in its accounting and finance department and internal audit.
2. Third-Party Expertise: Utilizing third-party resources with appropriate technical accounting expertise to assist in identifying and addressing complex technical accounting issues affecting financial statements.
3. Risk Assessment: Designing and implementing a continuous risk-assessment process to identify and assess risks of material misstatements, ensuring financial-reporting processes and internal controls are appropriately designed and maintained.
4. Enhanced Analysis and Review Procedures: Implementing more rigorous analysis and review procedures and documentation for the application of Generally Accepted Accounting Principles (GAAP), complex accounting matters, and key accounting policies.
5. Robust Estimation Policies: Augmenting estimation policies and procedures to be more robust and consistent with overall market dynamics, including evaluating the effectiveness of certain process-level controls.
6. Enhanced Documentation: Deploying new tools and tracking mechanisms to enhance and maintain appropriate documentation concerning the classification of certain operating expenses.
7. Reporting to Audit Committee: Regularly reporting to the Company’s Audit Committee on progress and results, including the identification, status, and resolution of control deficiencies.

Andy Marsh, CEO of Plug Power, expressed satisfaction with the settlement, saying, "We are pleased to announce we have reached a settlement with the SEC. Plug has diligently and fully cooperated with the SEC throughout the process and took prompt corrective measures and extensive remedial actions and steps to improve and enhance our policies, procedures, and internal controls over financial reporting."

The resolution of this matter represents an important step for Plug Power as it seeks to move forward with its commitment to providing innovative hydrogen solutions for a sustainable future. The company's focus on remediation and cooperation with regulatory authorities underscores its dedication to ensuring transparency and accuracy in its financial reporting processes.