SEC action against Musk 'substantially likely,' a former commissioner says

Andrew Cummings
August 18, 2018

The Wall Street Journal reported Wednesday (subscription required) that Tesla's board has received subpoenas from the Securities and Exchange Commission regarding Musk's Tweet about taking the company private.

Elon Musk, the billionaire chief executive of Tesla, stunned investors with his announcement on Twitter that he had he "secured" funding and would take the company private at $420 a share, valuing it at $72bn. There are also four lawsuits filed againts Tesla and Musk for misleading investors.

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.

Reuters reported on Wednesday that the PIF's other commitments in Saudi stocks and other investment projects would mean it was unlikely to play a significant role in any Tesla buyout. Even before Musk's message on August 7, the SEC had been inquiring about issues at Tesla.

A subset of independent directors, who have formed a committee to consider any formal proposal to take Tesla private, have hired another law firm, Latham & Watkins.

The reason: Mr Musk's funding claims are alleged to have been of the misleading sort - something the SEC doesn't look kindly on.

The subpoena came after Musk's tweet, "funding secured".

"I chose to send this info out because I have been humiliated by Tesla and Elon Musk", Tripp told Business Insider.

Goldman Sachs says it's acting as a financial adviser to Tesla. Rice, the first African-American and second woman to join the board, is CEO of Johnson Publishing Company and Chairman Emeritus of EBONY Media Holdings, the parent of EBONY and Jet brands, according to Tesla's website.

Gene Munster, a managing partner at the venture-capital firm Loup Ventures, echoed that point in an interview with CNBC.

Musk said he wanted to take the automaker private to focus on the automaker's vision outside of quarterly earnings calls and to remove "perverse incentives for people to try to harm what we're all trying to achieve".

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