started after CEO tweet claimed funding to go private
probe is running alongside SEC civil investigation
Is Said to Face U.S. Criminal Probe Over Musk
Justice Department is said to be investigating comments made
by Elon Musk. Bloomberg’s Tom Schoenberg reports.
Inc.is under investigation by the
Justice Department over public statements made by the
company and Chief Executive OfficerElon
Musk, according to two people familiar with the
matter. The criminal probe is running alongside a previously
reported civil inquiry by securities regulators.
prosecutors opened a fraud investigation after Musk tweeted
last month that he was contemplating taking Tesla private
and had “funding secured” for the deal, said the people, who
were granted anonymity to discuss a confidential criminal
probe. The tweet initially sent the company’s shares higher.
investigation by the U.S. attorney’s office in the Northern
District of California follows asubpoenaissued
by the Securities and Exchange Commission seeking
information from the maker of electric cars about Musk’s
plans to go private, which he has since abandoned.
criminal inquiry is in its early stages, one of the people
familiar with the matter said. Justice Department probes,
like the civil inquiries undertaken by the SEC, can take
months. They sometimes end with prosecutors deciding against
bringing an enforcement action.
shares reversed gains and dropped as much as 4.4 percent to
$282. The stock dropped 2.5 percent to $287.60 as of 11:45
a.m. in New York and are down about 7.7 percent this year.
didn’t have an immediate comment. Abraham Simmons, a
spokesman for the U.S. attorney’s office in San Francisco,
declined to comment.
enforcement attorneys in the San Francisco office were
already investigating Tesla before Musk sent his tweet on
taking the company private, BloombergreportedAug.
9. The existing probe focuses on whether Tesla had issued
misleading pronouncements on manufacturing goals and sales
targets, according to two people familiar with the matter.
unclear whether the criminal investigation is that broad.
Prosecutors in securities-fraud investigations could seek
evidence on matters including whether company leaders
intentionally lied to investors about the health of the
exposed himself to legal risk by tweeting Aug. 7 that he had
the funding for a buyout even though that may not have been
the case. Almost a week later, Musk said the basis for his
statement was conversations with Saudi Arabia’s Public
Investment Fund, which first expressed interest in helping
take the company private in early 2017.
board then said that it hadn’t received a formal proposal
from Musk, who’s also the company’s chairman, nor had it
concluded whether going private would be advisable or
feasible. Less than three weeks after his initial tweets,
that Musk’s tweeting has attracted the Justice Department’s
attention, investigators there could extend their review to
other public statements made by the CEO about the company’s
health, one of the people familiar with the matter said.
Authorities could also look into the circumstances
resignationof Tesla’s Chief
Accounting Officer, Dave Morton, after less than a month on
the job, the person said.
a former chief financial officer for computer hard-drive
maker Seagate Technology Plc, joined Tesla one day before
Musk tweeted that he was considering buying out some
investors at $420 a share and taking the company private.
With assistance by Joel Rosenblatt, and Eric Newcomer