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Abu Dhabi, UAETuesday 25 September 2018

Tesla ‘receives subpoena’ over Elon Musk’s tweet

Fox Business has reported that Securities and Exchange Commission has asked for further information

Tesla has received a subpoena from the US Securities and Exchange Commission. Reuters
Tesla has received a subpoena from the US Securities and Exchange Commission. Reuters

Tesla has received a subpoena from the US Securities and Exchange Commission (SEC) regarding Elon Musk’s effort to take the company private, indicating that the regulatory scrutiny of his statements have reached a more serious stage.

The demand for information, described by a person familiar with the matter, followed Mr Musk’s tweet last week that he was considering taking Tesla off the market and his claim to have had “funding secured” for the deal.

The electric-car maker’s shares dropped 2.6 per cent to US$338.69 (Dh1,244), closing at the lowest since the chief executive set off a firestorm last week.

SEC spokeswoman Judith Burns and a Tesla spokesman declined to comment.

Mr Musk exposed himself to legal risk by tweeting on August 7 that he had the funding for a buy-out, without providing specifics to back up the claim. Almost a week later, the chief executive and top Tesla shareholder said his confidence was based on conversations with Saudi Arabia’s Public Investment Fund, which first expressed interest in helping take the company private early last year.

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“The whole format of his announcement was highly problematic and very unusual,” Harvey Pitt, a former SEC chairman who now leads advisory firm Kalorama Partners, said on Wednesday on Bloomberg Television. “You can’t tell a lie.”

Fox Business first reported earlier on Wednesday that the SEC sent the subpoena.

Mr Musk also tweeted on Monday that Goldman Sachs and Silver Lake would act as financial advisers, but neither had officially signed on at that point, people familiar with the matter said on Tuesday. Goldman Sachs on Wednesday suspended its ratings and price target for Tesla stock, citing its role as an adviser.

In addition to the SEC investigation, Tesla will probably need approval of US national security officials if Saudi Arabia finances the effort to take the company private. US President Donald Trump’s administration is stepping up scrutiny of foreign investment in American technology.

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