Tesla questioned about Elon Musk ‘go private’ tweet

US regulators have asked whether Elon Musk’s surprise announcement that he may take Tesla private was factual.

Elon Musk’s tweet saying Tesla may go private took the market by surprise. Pic: AP

US Securities regulators have inquired with Tesla about chief executive Elon Musk’s surprise announcement that he may take the company private and whether his claim was factual, people familiar with the matter said.

The Securities and Exchange Commission has asked whether Mr Musk’s unusual announcement yesterday was factual, the people said. The regulator also asked Tesla about why the disclosure was made on Twitter rather than in a regulatory filing, and whether the company believes the announcement complies with investor-protection rules, the people said.

Mr Musk yesterday proposed taking Tesla private at $US420 a share, about 11 per cent higher than the day’s closing stock price. He called the funding “secured” for what would be the biggest-ever corporate buyout, but he hasn’t disclosed details. A group of Tesla board members said Mr Musk spoke to them last week about taking the company private.

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

The SEC’s inquiries, which originated from its San Francisco office, suggest Tesla could come under an enforcement investigation if regulators develop evidence that Mr Musk’s statement was misleading or false.

It wasn’t immediately clear whether the regulator had opened a formal enforcement investigation based on the answers it received from the company. An SEC spokesman declined to comment.

Under US law, companies and corporate officers can be held liable for making misstatements or omitting information that shareholders need to make informed investment decisions. Mr Musk could be in trouble if regulators develop evidence that he made a statement only intending to goose his company’s share price.

Mr Musk has been at war with short sellers, investors who are betting Tesla’s stock price will decline, and has used Twitter before to joust with them. On May 4 he tweeted: “Oh and uh short burn of the century comin soon.” He wrote on the same day: “The sheer magnitude of short carnage will be unreal.”

Mr Musk, in an email to employees yesterday, cited short sellers and other pressures public markets put on companies as factors in announcing he wanted to take the company private.

The SEC generally allows companies to disseminate news using social media as long as they have told shareholders they might use those channels in addition to regulatory filings. Tesla told investors in a November 2013 filing to follow Mr Musk’s Twitter feed for “additional information” about the company.

Tesla didn’t immediately respond to a request for comment.

Dow Jones Newswires