Tesla has received a subpoena from the Securities and Exchange Commission (SEC) following CEO Elon Musk’s tweets about taking the electric vehicle company private, according to reports.
News of the subpoena comes after Bloomberg Business revealed Musk’s August 7 tweet, in which he claimed to have secured funding to take Tesla private for $420 a share, prompted SEC investigators in San Francisco to enlarge a previously unreported inquiry into the Palo Alto company’s public statements concerning their “manufacturing goals and sales targets.” Now, the agency is working to determine if the erratic billionaire’s statements were “truthful” and understand why he selected Twitter as the forum to make the announcement.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Shareholders could either to sell at 420 or hold shares & go private
— Elon Musk (@elonmusk) August 7, 2018
Tesla’s share price tumbled 3.3 percent to $336.40 following reports the company was served with a subpoena. The order to compel the electric vehicle company to turn over additional information related to Musk’s tweet, “typically requires the approval of top SEC officials,” the New York Times reports.
Tesla’s board of directors on Tuesday announced a special committee had been formed to study “proposals” to go private. “The special committee has not yet received a formal proposal from Mr. Musk regarding any Going Private Transaction nor has it reached any conclusion as to the advisability or feasibility of such a transaction,” a statement said.
At the start of the week, Musk admitted in a blog post that he has not officially secured funding — rather, he assumed a deal was certain after a face-to-face meeting with Saudi Arabia’s sovereign wealth fund. “I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving,” he wrote. “This is why I referred to ‘funding secured’ in the August 7th announcement.”
On Friday, two separate complaints were filed against Tesla in a federal court in San Francisco, with plaintiffs Kalman Isaacs and William Chamberlain accusing Musk of artificially inflating Tesla’s stock price, in a bid to hurt short-sellers’ position, by claiming funding to take the electric car company private was agreed upon. “It is clear that Defendant Musk Tweeted materially false and misleading information regarding the Going Private Transaction to exact personal revenge and ‘squeeze-out’ the short-sellers who had purportedly been badgering him for months,” says the lawsuit.
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