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Probe into Musk on taking Tesla private

AAP  |  19 Sep 2018Text size  Decrease  Increase  |  
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WASHINGTON [AAP] - Tesla Inc says the US Department of Justice is investigating Chief ExecutiveElon Musk's public statements in August that he was considering taking the electric car maker private, the latest and biggest threat to Musk's leadership.

The Justice Department asked Tesla for documents about Musk's announcement, Tesla said, describing it as a "voluntary request."

The company said it was co-operating and that the matter "should be quickly resolved".
The probe by the Justice Department, which can press criminal charges, comes on top of a civil probe by the Securities and Exchange Commission and shareholder lawsuits.

The Justice Department declined to comment. Bloomberg reported earlier that federal prosecutors had opened a criminal fraud investigation. Tesla did not say whether the Justice Department probe was criminal or civil.

Elon Musk Tesla

Tesla founder and CEO Elon Musk is facing a US DoJ investigation

Musk surprised investors on August 7 with his plan to take Tesla private, tweeting that he had "funding secured" for a deal that would have valued the company at $US72 billion ($A100 billion). In a separate tweet, he wrote: "Investor support is confirmed."

Tesla's shares rose after his tweet, but investors in the company's bonds and convertible debt were skeptical that the tens of billions of dollars needed for the buyout would materialise.

After two weeks of uncertainty, particularly over funding, Musk abruptly abandoned the plan on August 24, saying it would be even more time-consuming and distracting than anticipated, and that "most of Tesla's existing shareholders believe we are better off as a public company".

Tesla's stock, which has lost about 25 per cent since its gains after Musk first tweeted about going private, fell 3.5 per cent to $US284.50 ($A394.15) on Tuesday.

The SEC has already opened an inquiry into Musk's tweets, according to one person with direct knowledge of the matter, and short-seller Citron Research has sued Musk over the truthfulness of his tweet about secured funding. The SEC has not commented on the case.
The SEC has in the past month sent subpoenas also to investment bank Goldman Sachs Group Inc and buyout firm Silver lake as they were hired by Tesla to explore the going-private deal, the New York Times said.

Goldman Sachs and Silver Lake did not immediately respond to a request for comment.
Tesla biggest institutional investor Baillie Gifford said last week it was questioned by the SEC about Musk's plans to take the electric carmaker private. An executive with the asset manager said the chief executive needed help running the company.

 

 

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