The US Securities and Exchange Commission (SEC) has reportedly sent subpoenas to Tesla after CEO Elon Musk tweeted that he planned to take the business private.
According to The Guardian, sources told Fox Business Network (later backed up by The New York Times and Wall Street Journal) that the SEC is "formally investigating" Musk's tweets after his claim he had "secured" funding to take the business private at $420 per share. If his claim proves to be untrue, Musk may be in violation of US securities law.
While some have suggested Musk's comments were flippant, a formal investigation by the SEC could prove troublesome for the company, whose share price rocketed 11 percent the day Musk tweeted about the funding (it dipped 4 percent with this latest news). Tesla has been operating at a loss and is currently being sued by investors who claim that Musk's tweets were "false and misleading."
On Monday, Musk published a blog post attempting to clarify his announcement.
“The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private. However, it wouldn’t be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time,” he wrote.
Tesla's board of directors has been attempting to limit the fallout from Musk's actions, with some members asking the CEO to stop tweeting. According to the NYT, the board's independent directors have hired law firm Paul, Weiss, Rifkind, Wharton & Garrison to represent Tesla as the SEC investigation progresses.
In related news, Elon Musk responds to Azealia Banks' claims that he tweeted while on acid.