Date
18 October 2018
Tesla’s stock has lost about 25 percent since its gains after CEO Elon Musk first tweeted In August that he was considering taking the company private. Photo: AFP
Tesla’s stock has lost about 25 percent since its gains after CEO Elon Musk first tweeted In August that he was considering taking the company private. Photo: AFP

US Justice Dept probes Musk statement on taking Tesla private

Tesla Inc. said the US Department of Justice is investigating chief executive Elon Musk’s public statements in August that he was considering taking the electric car maker private, Reuters reports.

The Justice Department asked Tesla for documents about Musk’s announcement, Tesla said, describing it as a “voluntary request”. The company said it is cooperating 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.

Musk surprised investors on Aug. 7 with his plan to take Tesla private, tweeting that he had “funding secured” for a deal that would have valued the company at US$72 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 materialize.

After two weeks of uncertainty, particularly over funding, Musk abruptly abandoned the plan on Aug. 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 has lost about 25 percent since its gains after Musk first tweeted about going private.

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. 

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RC/CG

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