Published: Sat, August 18, 2018
Finance | By Loren Pratt

SEC sends subpoena to Tesla over Musk’s take-private tweet

SEC sends subpoena to Tesla over Musk’s take-private tweet

The U.S. Securities and Exchange Commission (SEC) has reportedly subpoenaed Tesla, likely indicating that the regulatory body will be conducting a formal investigation of CEO Elon Musk's publicly stated intention to take the company private.

Shares fell as much as 4.5 per cent earlier in the session.

At the center of the controversy is what Musk meant when the chief executive officer tweeted August 7 that he had the funding for a buyout, without providing specifics to back up the claim. No punctured cells have ever been used in any Model 3 vehicles in any way, and all VINs that have been identified have safe batteries.

The SEC and Tesla declined to comment on the reports.

Nearly a week later, Musk said his confidence was based on conversations with Saudi Arabia's Public Investment Fund, which first expressed interest in helping take the company private in early 2017.

Since Musk's tweet, it has become clear that neither Musk nor Tesla had the necessary financing set aside for the privatization, drawing skepticism from both investors and analysts, according to CNBC.

In June Tesla sued Tripp for alleging that he hacked the company and transferred secret information to third parties. Tesla's shares were last down 1.9% at $341.00 on Wednesday.

Musk casually tweeted the news last week, and the markets were unexpectedly jolted. "Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction".

Bloomberg cited lawyers as stating even before the new law passed on Monday a major investment in Tesla by Saudi Arabia would have drawn scrutiny.

Musk's tweet may have violated United States securities law if he misled investors.

Tesla says it has formed a special committee of three independent directors to asses any proposal from Mr Musk.

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