Tesla and Elon Musk under fire as SEC issues subpoenas
US authorities have intensified an investigation into Tesla's privatisation plan by issuing formal summons to the electric car manufacturer's chief executive Elon Musk.
The Securities and Exchange Commission (SEC) investigation was launched after Mr Musk tweeted on August 7 that he had “funding secured” to take the business private at a price of $420 per share, triggering a 13 per cent spike in the share price of Tesla.
The SEC investigation into the company stepped up a gear on Wednesday when the SEC issued a formal subpoena to Tesla officials and Mr Musk, the company's billionaire founder, according to Fox News.
The SEC has reportedly demanded more information regarding the statement that Tesla had "funding secured" and the company's privatisation plan, which were first published on Twitter.
Mr Musk subsequently clarified that the funding would come from the sovereign wealth fund of Saudi Arabia.
Tesla's share price dropped 3.9pc following the reports of the subpoenas, which are likely to complicate any discussions about taking the group private.
The news follows Tesla's decision to create a special committee to consider a proposal from Mr Musk to take the business private.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Following Mr Musk's initial tweet, six board members said they had discussed Tesla being taken private with Mr Musk and held several meetings about the potential $72bn (£56bn) move.
Tesla said in a filing with the SEC on Monday that it had created a committee of three board members to evaluate an expected formal proposal for Musk on taking the business private.
Mr Musk also tweeted that he had hired Goldman Sachs to represent the company during the proposed privatisation, although later reports suggested that the Wall Street bank "hadn't been formally tapped" to act for Tesla at the time of the initial tweet.
Former SEC chairman Harvey Pitt said that Mr Musk's tweets could land him in hot water.
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“If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, and it could also be securities fraud,” Mr Pitt told CNBC. “The use of a specific price for a potential going-private transaction is highly unprecedented, and therefore raises significant questions about what his intent was. So that would have to be investigated.”
Tesla and the SEC declined to comment. The decision by Musk to publicly tweet his decision to take Tesla private has also triggered three lawsuits from Tesla investors over the big share price swings.
