By on August 15, 2018

Tesla Model 3

While the U.S. and now Canada enjoy carrying out international diplomacy via tweet, the business world lays out a few ground rules. If you’re the head of a multi-billion dollar publicly traded company, maybe it’s best to not announce your intention to take the company private — while stating there’s funding on hand to pull it off — in a tweetstorm, especially if there aren’t details to back it up. Dry, boring, but concise media releases or regulatory filings alerting shareholders usually do the trick.

After looking into Tesla’s going-private plan, announced August 7th by CEO Elon Musk over Twitter, the U.S. Securities and Exchange Commission now wants hard answers. While it might be willing to overlook the tweet (Musk, a prolific tweeter, previously told investors that announcements could happen this way), the SEC wants Musk to back up his “funding secured” claim. What person, persons, or entity made this deal possible?

Maybe a round of subpoenas will clear things up.

According to sources who spoke to Fox Business, the SEC has sent subpoenas to Tesla to find out the validity of Musk’s funding claim. That usually signals the start of a “formal” investigation, reporter Charles Gasparino stated. Because it’s 2018, Tesla fans immediately accused Gasparino of secretly working with short sellers to depress the automaker’s stock.

In blog posts published after his tweets, Musk said he’s had conversations with the Saudis, leading many to think that the Saudi Arabian sovereign wealth fund, which owns a 5 percent stake in the automaker, might be the source of the riches. Other financiers might be interested, Musk suggested.

Given that Musk’s tweets and blog posts serve as an investor’s only information on the matter, the SEC feels they’re being kept in the dark. There’s penalties waiting for companies that don’t make themselves crystal clear in these circumstances.

It’s not entirely the procedural equivalent of the Wild West at Tesla. On Monday night, Musk announced the hiring of Silver Lake Partners and Goldman Sachs as financial advisers, with firms Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson serving as legal advisers. Tuesday brought an SEC filing that states the company’s intent to form a special committee to review the plan, once it materializes on paper.

Still, the SEC’s probe looms large over the automaker. Reuters reports Tesla’s board has hired law firm Paul, Weiss, Rifkind, Wharton & Garrison to help deal with the SEC investigation.

[Image: Tesla]

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34 Comments on “SEC Gets Serious in Tesla Going-private Probe, Issues Subpoenas: Report...”


  • avatar
    indi500fan

    If nothing else, this will be a “jobs program” for extremely well compensated (reportedly approaching 2 grand / hour) attorneys.

    • 0 avatar
      Rick Astley

      Meh, that’s not too much. During the EU matters, Microsoft was well over that (per hour) for some of their top lawyers. And that was in the early 2000’s. Going out on a limb here but lawyers don’t exactly lower their rates as time moves on.

      I would estimate that a proper lawyer trying SEC matters with a JD at least 10 years in the past would be north of $3,000-$3,200 an hour for the top talent. Although Associates and Of Council would be the lions share of hours billed and at drastically lower rates.

  • avatar
    ravenuer

    Tesla…….Tucker……?

  • avatar
    APaGttH

    One-hundred years from now I suspect history will look back at Elon Musk in the same light as history now looks at Thomas Edison. A monster, a horrid human being, a thief, and a complete a hole.

    • 0 avatar
      ToddAtlasF1

      At the same time, you’re suggesting he’ll pull off fleecing everyone of any merit that he ever rubs up against.

    • 0 avatar

      They already say these things about Steve Jobs – horrible human being, evil capitalist, in other words incarnation of Devil on the Earth. Not even 10 years passed since.

    • 0 avatar
      JimZ

      I’m one to take any opportunity to criticize Elon Musk, but I don’t go anywhere near as far as to consider him a “monster” or a “horrid human being.” I think that the combination of

      1) being in a group of people who can become intensely focused on certain things and obsessed with even minute details, while struggling to understand or read context and social cues leading him to act in seemingly irrational ways, and

      2) a drive to keep working on something until he thinks its done.

      so the guy is intensely driven and detail oriented, and doesn’t quite understand that most other people don’t want to work 19 hours a day and are likely to interpret his “jokes” or “offhand comments” seriously.

    • 0 avatar
      Guitar man

      Elon’s not even American for Christ’s sake !

    • 0 avatar
      ravenuer

      I say thank God for Thomas Edison. Otherwise….dark.

      • 0 avatar
        JimZ

        incandescent lamps existed before Edison, you know. Arc lamps even older than them. otoh it was Nikola Tesla with Westinghouse which made wide-scale power distribution possible with alternating current.

      • 0 avatar
        APaGttH

        Edison didn’t invent the light bulb, he figured out that carbon filament made from bamboo would last longer then other filaments. The design of a glass bulb with a filament heated through electrical current in a vacuum was in existence in 1840. A number of scientists/inventors around the world worked on improving the vacuum process and improving filaments. Edison was one of many. The tungsten filament that was used until the advent of our current LED lights wasn’t brought to the table until 1910, and although Edison knew tungsten would make a good filament for a light bulb, he couldn’t figure out how to make it into thin wire.

    • 0 avatar
      redrum

      I don’t get all the hyperbolic hate for Musk that is so frequent in the comments here. I realize he’s a bit of a blowhard and frequently steps on people’s toes & gets in their faces with his type A personality, but the general consensus for those that actually know him is that he’s actually pretty great to work for and with. I have no idea how he’s a “thief”, he’s clearly not inventing things himself, his engineers are, and I have never seen him claim otherwise.

  • avatar
    civicjohn

    When a company’s board lawyers up, that’s not really a good sign.

    • 0 avatar
      Malforus

      Neither is your CEO making specious claims about taking the firm private catching everyone flatfooted.
      Its almost as pants on head stupid as the President of the US using twitter to announce cabinet positions being vacated and temporarily filled.

  • avatar
    mjg82

    I’ve decided I’m getting all of my Elon news from Azealia Banks from now on. The past few days have been wild on her social.

  • avatar
    namesakeone

    I was going to say something about a certain 1990s Ford sport coupe/hatchback mentioned in the article title, but I won’t. You’re welcome.

  • avatar
    sgeffe

    “[W]ith firms…serving as legal and financial advisers….”

    Where’s “Dewey, Cheatem & Howe?”

    Oh wait..that’s Musk to his reservation-holders…!

    I’ll show myself out!

  • avatar
    FWD Donuts

    Musk really stepped on a rake with this one. The announcement of Silver Lake and Goldman as financial advisors after the fact — without filing the proper SEC paperwork smells like he’s making this thing up as he’s going along.

    Of course, the Electric Cult will defend him to the end. They’re 100x more irritating than the Prius jokers when those things were really popular a few years ago. Think Gerald Broflovski in Smug Alert.

    youtube.com/watch?v=OM9jhGiIAFM

    • 0 avatar
      civicjohn

      @FWD,

      couldn’t help myself – “Musk really stepped on a rake with this one.”

      Yesterday I stepped on my cane and I got exactly what you described, but with the shorter length of my cane, one can only imagine the results.

      Let’s just say I went from a tenor to an soprano…

  • avatar

    I have a feeling lately that the next world war will start with msg exchange over tweeter. Does Xi has account? Putin does.

  • avatar
    SCE to AUX

    The SEC’s involvement is as it should be.

    But if it’s the Saudis funding this adventure, I’m not a fan of that part.

    • 0 avatar
      mcs

      I agree about the SEC. As far as the Saudis go, there are a lot of other investors so I’m not worried. I’m sort of a nano-scale version of the Saudis and doing the same thing. I’ve been moving my oil income into things like battery tech, biotech, and AI. The big US oil companies are starting to look into building charging networks and are investing in battery technology. Even with EVs, you’ll still need oil for lubricants, composites, and ironically solid state battery electrolyte.

  • avatar
    APaGttH

    Now there are reports of literally thousands upon thousands of Model 3s stored in two different California locations. Way more cars being piled up than leaving the storage lots.

  • avatar
    Tstag

    If Elon does take Tesla private then I fear he’s paying way over the odds for the company. He doesn’t seem at all bothered by the fact that car makers are piling into his space and will start to eat a big chunk of his market share in what is still a niche area of the market. Good luck with that.

    • 0 avatar
      SCE to AUX

      “car makers are piling into his space”

      “Trickling” is more like it.

      1. Mfrs simply don’t have the production capacity to match Tesla at this point; it will cost them billions to develop.

      2. Mfrs aren’t really interested in losing money on EVs. Building a profitable EV – especially in the $35k price range – is exceptionally difficult.

      3. Building a few hundred compliance cars every month doesn’t make a mfr competitive in the EV space.

  • avatar
    Bazza

    Where’s our resident Tesla shill Beancounter to set us all straight?

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