Elon Musk Tweets Results In U.S. Criminal Probe Against Tesla

According to media reports quoting sources, the United States Justice Department is investigating the electric car maker Tesla Inc. over the statements that gad been made by the Chief Executive Officer of the company Elon Musk. Sources also reportedly said that this criminal probe is being conducted in addition to the already reported civil investigation by the Securities and Exchange Commission of the country.

The investigations against Musk were initiated after his tweets last month where he announced his plan to taking Tesla private and that he had even managed to ”secure funding” for the same. The tweet had resulted in the share price of Tesla climbing appreciably initially.

The company has confirmed to the media that the Justice Department had got in touch with it.

“Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it,” the company said in a statement released Tuesday following Bloomberg’s report of the investigation. “We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”

Earlier the Securities and Exchange Commission has filed a subpoena on Tesla asking for information from the company about the tweeted plans of Musk to take the company private. The plan had subsequently been discarded.

Sources told the media that the criminal inquiry is in its early stages. Both the SEC and Justice Department investigations can drag on for months. Sometimes such investigations end in the prosecutors deciding not to bring in any charges against eth accused.

There was a drop of 3.4 per cent in the shares of Tesla following the news of the investigations compared to an overall drop of 8.5 per cent so far this year.

According to a report in Bloomberg published on August 9, even before Musk had tweeted about his plans to take Tesla private, the company was already being investigated by SEC enforcement attorneys in the San Francisco office. According to sources quoted in the media, that probe is aimed at ascertaining whether the company had made misleading declarations about its manufacturing goals and sales targets.

Whether the scope of the criminal investigations is as large as the SEC one is not yet clear. Investigators related to the securities-fraud case might ask Tesla to submit papers that can serve as evidence on issues such as whether the company leaders and the management at Tesla were intentionally untruthful about the state of the business to investors.

On August 7, Musk had tweeted that he had managed to secure the funding that he would require for a complete buyout of outstanding shares of Tesla to take it private, even though it might not have been true, which exposed him to a legal risk. He backtracked almost a week later when he admitted that the basis of his statement were conversations with Saudi Arabia’s Public Investment Fund. It has been reported that the Fund had shown initial interest in privatization of Tesla in early 2017.

(Adapted from Bloomberg.com)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s