The Securities and Exchange Commission inquiry into stun-gun maker Taser International Inc. is now a formal investigation with an expanded scope, the company said Tuesday.
Shares tumbled more than 13 percent after the announcement.
The company had previously said the SEC was looking into claims Taser has made about safety studies for its stun guns and has also been looking into a $1.5 million, end-of-year sale of stun guns to a firearms distributor in Prescott. Some stock analysts have questioned the deal because it appeared to inflate sales to meet annual projections.
The formal probe is now also examining the possibility that outsiders acquired internal company information to manipulate the stock price, Taser said in a news release.
“We were kind of surprised that it went to this level at all,” Taser President Tom Smith told The Associated Press on Tuesday. “We’ve given them everything they’ve asked for. We can only speculate that (the formal investigation) was needed to go outside the company” to require testimony from outsiders.
Smith said that neither he nor Taser CEO Rick Smith, his brother, had received subpoenas. Smith also said that, to his knowledge, the company as a whole hadn’t been subpoenaed.
Smith said Taser couldn’t disclose when the investigation became formal. The investigation was still an informal inquiry as of mid-August, according to a quarterly reported filed last month with the SEC.
An SEC spokesman said that as a matter of SEC policy, the agency would neither confirm nor deny any investigation.
Taser began marketing police stun guns in 1998 as a way to subdue combative people in high-risk situations. Now, more than 7,300 law enforcement agencies and military installations use them worldwide.
But critics say the stun guns have been used too liberally by police and have contributed to scores of deaths. Amnesty International has compiled a list of more than 100 people the group says have died after being shocked in scuffles with lawmen.
A letter published in the New England Journal of Medicine earlier this month suggested that officers who deploy Tasers should also consider carrying heart defibrillators. The letter was authored by two doctors at Children’s Memorial Hospital in Chicago who documented a known case of ventricular fibrillation — a potentially fatal heart arrhythmia — in a teenager who was shocked with a Taser.