Tesla faces probes over Musk’s plan to take it private


The U.S. Justice Department are investigating Tesla after CEO Elon Musk had stated publicly his plan to take the company private. He has since revoked the statement but has been asked to hand in supporting documents.

Tesla has reacted to the probe saying they had received a “voluntary request for documents” from the Department of Justice (DOJ) and that they had been cooperative. In addition, a civil probe led by the Securities and Exchange Commission and shareholder lawsuits is ongoing.

In a statement to Bloomberg, Tesla emphasised that this is a quest for information rather than a formal legal proceeding: “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.”

The investigations by both the DOJ and SEC follow a tweet Tesla CEO Elon Musk had published in August, in which he had not only voiced his plan to take the company off the stock exchange but also claimed he had secured funding. The latter is a matter that needs proof or else may be seen as a misleading or false statement. The issue is of alleged market manipulation as the tweet had sent Tesla shares surging initially.

The investigations are in the early stages and might take months. And, they may not even result in prosecutors bringing any charges. For example, the SEC generally allows companies to use social media to disseminate news as long as they have told shareholders they might use those channels in addition to regulatory filings. Tesla told investors in a November 2013 filing to follow Mr. Musk’s Twitter feed for “additional information” about the company.

Moreover, Elon Musk has since revoked his plans to take Tesla private, after the Board and powerful investors such as Goldman Sachs or Morgan Stanley intervened (we reported).



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