The long week for Tesla is getting even longer as the company has now been subpoenaed by the Securities and Exchange Commission, according to multiple reports.
First reported by the Fox Business Network and confirmed by The New York Times, federal regulators appear to be interested in Elon Musk’s August 7 tweet regarding his plans for privatizing the electric car manufacturer and his claims to have found investors committed to finance the transaction.
From later statements it has become clear that Musk had not actually secured financing, and has only had preliminary talks with investors.
Federal securities regulators have served Tesla with a subpoena, according to a person familiar with the investigation, increasing pressure on the electric car company, as it deals with the fallout from several recent actions by its chief executive, Elon Musk.
For Musk, the ill-advised tweet was either a drug-induced bit of foolishness or a short-sighted attempt to address the hordes of short-sellers who have swarmed over the stock, angling to make millions of dollars off of any perceived misfortune in the market.
Tesla declined to comment for this article.
According to the Times, regulators were interested in Tesla even before Musk began his erratic tweeting. They were already questioning Tesla whistleblower Martin Tripp (according to the Times), who has claimed that the company knowingly manufactured batteries with punctured holes, which could impact hundreds of cars; misled the public about the number of Model 3s actually being produced by as much as 44 percent; and lowered vehicle specs so the company could use waste and scrap material in vehicles.
While Tripp’s allegations are explosive enough, they’re now being overshadowed by the current drama over Musk’s tweets, which sent the stock price of his company soaring.
While Tesla has now retained Goldman Sachs to arrange financing for a privatization, at the time of Musk’s tweets last week, no financing had been secured.
That could land the serial entrepreneur in a lot of hot water.