Musk's tweets put Tesla in the spotlight — Business Extra Podcast

Mae Love
August 18, 2018

The US Securities and Exchange Commission has sent subpoenas to Tesla Inc (NASDAQ:TSLA) regarding CEO Elon Musk's "420" plan to take the company private and his statement that funding was "secured".

Tesla's share price fell down 2.6 percent to $338.69 on August 15, following news of the subpoena, lower than the share price the day prior to Musk's tweet. The subpoenas are meant to help the SEC determine whether or not Musk's tweets and blog posts "intentionally misled investors".

Tesla is now a public company and has been under pressure to meet production goals for its Model 3 electric auto despite facing production challenges.

The Wall Street Journal said the SEC was seeking information from each Tesla director. The Saudi fund has acquired almost 5 percent of Tesla by accumulating shares on the open market. Subpoenas typically indicate the SEC has opened a formal investigation into a matter.

Musk casually tweeted the news last week, and the markets were unexpectedly jolted.

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Representatives for the SEC and Tesla declined to comment. "Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction".

Mr Musk tweeted on Monday that he was working with Goldman Sachs and private equity firm Silver Lake.

Corporate governance experts say that caveat shows the financing of the deal isn't finalised, as Musk initially indicated, a contradiction that could be used to prove he deliberately misled investors with his tweet. The newspaper cited an unidentified person familiar with the matter after Fox Business News reported the SEC's move.

Teslas' board of directors is also understood to have sought legal advice and will retain their independent financial adviser to assess any potential Musk plan.

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