The Securities and Exchange Commission is reportedly ramping up its investigation into Tesla and CEO Elon Musk’s bid to take the company private, including his statements that he had “funding secured” to make it happen.
The SEC inquired about Musk’s missive shortly after he fired it off last Tuesday, but now the agency has sent subpoenas to Tesla regarding the possible privatization plan, according to Fox Business reporter Charles Gasparino.
Gasparino, citing unnamed sources, said the agency’s subpoenas focused on Musk’s “funding secured” statement, as well as the proposal itself, though numerous outlets have highlighted in recent days how there appears to be nothing more substantive than Musk’s wishes to take the company private.
A Tesla spokesperson declined to comment on the report to Jalopnik.
The automaker’s board of directors is apparently also in upheaval, according to The New York Times. Some of the members have even implored him to leave behind his favorite pastime of communicating with The People: his tweets.
Mr. Musk hasn’t heeded that advice. He has continued to post messages on Twitter, publicly plotting the company’s strategy and in some cases making assertions of dubious accuracy. That has only added to the chaos engulfing the struggling company.
Some members of the board have “grown alarmed,” the Times, citing three people familiar with their thinking, says, “by what they see as Mr. Musk’s erratic behavior.” The board had no idea Musk had any intention of floating a take-private bit until the tweet suddenly appeared on Twitter, and it sent the directors scrambling to issue a terse statement of their own and, on Monday, to form a special committee to consider the idea.
This line sounded especially familiar:
Multiple directors have recently told Mr. Musk that he should stop using Twitter, with one urging him to stick to building cars and launching rockets, according to people familiar with the board’s communications. Tesla employees, including the company’s public-relations staff, have echoed that point, another person said.
Adding fuel to an already spiraling situation, the automaker is now facing a fourth lawsuit from an investor, who claims Musk fraudulently engineered a scheme to artificially inflate Tesla’s stock price, in an effort to get back at short sellers—those who are betting the company will eventually tank.
The lawsuit, filed in U.S. District Court in California, comes from investor Carlos Maia and asks a judge to certify a class of investors covering the period of August 7-14th.
Following Musk’s tweet on August 7, Maia says he purchased several thousand shares of Tesla stock, and that as a result the CEO’s alleged false and misleading statements about the take-private bid, he suffered financial damages covered by federal securities’ laws.
“As a direct result of the public revelations regarding the truth about the condition of Tesla’s business and the negative adverse factors that had been impacting Tesla’s business during the Class Period, the price of Tesla’s securities materially declined,” the complaint state. “This drop removed the inflation from Tesla’s share price, causing real economic loss to investors who purchased Tesla securities during the Class Period.”
Tesla’s stock was down 4 percent upon the report of the SEC’s intensifying probe.