Elon Musk's Tweets Draw SEC Scrutiny

By:
Chris Gaetano
Published Date:
Aug 9, 2018
SECURITIES-AND-EXCHANGE-COMMISSION-facebook

The Securities and Exchange Commission (SEC) is investigating whether Tesla CEO Elon Musk's tweet that he wants to take his company private violated securities law, as it is unsure whether the firm actually has the financing to do so, according to the Wall Street Journal. Musk on Tuesday said in a tweet that he is considering taking the company private at $420 a share, believing it will insulate Tesla from shareholder demands that he believes do not fit his vision.The move shocked Wall Street, not least of which because he said it over Twitter and his tweet lacked the details that analysts expect from such an announcement. The vagueness of the plan has led some to wonder whether he actually has the financing to do so: While he said financing has been secured, no one has heard word of any details, and while he said he has investor support, it's unknown which investors he's referring to. 

Now the SEC is wondering too. If Musk tweeted out the plan without having the requisite funding to carry it out, that could be a securities law violation, as companies and corporate officers can’t give shareholders misleading information about meaningful company events, said the Journal. It could get even worse if they find out he made the announcement to manipulate the company's share price. While it is unknown whether the SEC has launched formal enforcement actions against him, it would not need to do so to simply ask him for documentation backing up his claims. 

Click here to see more of the latest news from the NYSSCPA.