By Jonathan Stempel
(Reuters) -View’s former chief financial officer must face allegations by the U.S. Securities and Exchange Commission that he negligently allowed the “smart window” maker to understate the cost of replacing defective windows, a federal judge ruled.
In a decision late Monday, U.S. District Judge Beth Labson Freeman in San Jose, California, rejected former Chief Financial Officer Vidul Prakash’s claim that the SEC could not prove in her civil case that her actions violated anti-fraud and other provisions of the federal securities laws.
Prakash’s attorneys did not immediately respond to requests for comment outside of business hours Tuesday.
View went public in March 2021 through a $1.6 billion merger with a special purpose acquisition company backed by Cantor Fitzgerald. The Milpitas, California-based company filed for Chapter 11 bankruptcy in April 2024 and agreed to go private.
The SEC case announced in July 2023 arose from a defective sealing component in View smart windows, whose tinted glass adjusts with the sun and is often used in office buildings.
See allegedly understated liabilities related to windows by $25 million in 2019 and $28 million in 2020 by failing to disclose shipping and installation costs as well as manufacturing costs.
Prakash said the SEC could not prove that it knew or should have known that View would cover those costs.
But in a 30-page decision, Freeman said a reasonable jury could find that Prakash breached his duty of care and that his failure to tell View’s accountants what the company was doing was a “proximate cause” of the alleged understatement.
In November 2021, View replaced Prakash as CFO and decided to recast more than two years of financials.
He settled with the SEC without admitting wrongdoing and was not fined, reflecting his cooperation.
The case is SEC v. Prakash, U.S. District Court, Northern District of California, No. 23-03300.
(Reporting by Jonathan Stempel in New YorkEditing by Rod Nickel)