The U.S. government's growing interest in nuclear power has contributed significantly to the rise in upstart nuclear power stock NuScale Power (NYSE: SMR) lately. But it's another arm of the government, the Securities and Exchange Commission (SEC), that is energizing the bears today thanks to news that the agency that regulates U.S. securities is currently investigating NuScale Power.
As of 10:44 a.m. ET, shares of NuScale Power have plunged 16.9%.
Why is the SEC investigating?
Investors are learning of the story today after Hunterbrook Media broke news of the SEC's investigation this morning. In response to Hunterbrook Media's July 24 records request under the Freedom of Information Act request, the SEC informed the media outlet that it had "confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing."
The SEC denied Hunterbrook Media's request for documents pertaining to the investigation out of concern that "disclosure could be reasonably expected to cause harm to the ongoing and active enforcement proceedings."
A NuScale company spokesperson said, "Hunterbrook is a known short-seller that has a vested interest in sensationalizing information to manipulate the stock market. We are unaware of any SEC investigation for which NuScale is the target of the investigation or any reason for such an investigation."
Taking an innovative approach to designing nuclear power reactors, NuScale Power is the first company of its type to have its small modular reactors certified by the U.S. Nuclear Regulatory Commission.
Should investors act now?
Undeniably, it's disconcerting to find that one of your investments is now under the microscope of an SEC investigation, but experienced investors know that it's unwise to rush to judgment and exit a position in haste.
At this point, if you have a position in NuScale Power, the best course of action is to sit tight, waiting to learn further details of the investigation before you click the sell button. For those who have been waiting for a pullback in NuScale Power stock, however, now doesn't seem like the right time to click the buy button, either. Those investors should also wait to see what develops.
The report was updated to add comment from NuScale.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
