SEC launches formal Tesla inquiry with subpoena

  • SEC launches formal Tesla inquiry with subpoena

SEC launches formal Tesla inquiry with subpoena

The maverick billionaire and CEO of Tesla tweeted last week that he was considering taking his company private - a move that has caught the attention of the US Securities and Exchange Commission.

After Musk dropped his bombshell, Tesla's stock surged 11 per cent in one day, damaging a class of investors who had been betting the company's shares would decline.

Fox Business, which first reported the development, said the SEC's San Francisco office sent subpoenas to Tesla about the privatization plan and Musk's actions as the Wall Street regulator tries to determine whether the company's billionaire founder meant to mislead investors.

Martin Tripp, a former Tesla employee, tweeted pictures of damaged batteries that were allegedly being used in Model 3 cars and other flawed manufacturing practices in at the company's battery manufacturing factory near Reno.

The serving of a subpoena, which typically requires the approval of top SEC officials, indicates that an inquiry has advanced to a more formal, serious stage.

A follow-up blog post on Monday indicated that the funding would be coming from the Saudi Arabian wealth fund.

However, public speculation about the accuracy of Musk's initial tweet has continued to swirl, even as Tesla's board formed an independent committee to assess the possibility of going private. The tweet followed news that a Saudi investment fund had acquired a minority share in the business. Tripp has said the company and Musk have wrongly portrayed him as a saboteur. "Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction". There are also four lawsuits filed againts Tesla and Musk for misleading investors.

Elon Musk said Monday on Twitter that he is working with Goldman and the investment firm Silver Lake on his proposal to take Tesla private. However, Reuters says Mr Musk was still negotiating terms with Goldman on Tuesday.