SEC Gets Serious in Tesla Going-private Probe, Issues Subpoenas: Report

Steph Willems
by Steph Willems

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]

Steph Willems
Steph Willems

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  • Tstag Tstag on Aug 16, 2018

    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.

    • SCE to AUX SCE to AUX on Aug 16, 2018

      "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.

  • Bazza Bazza on Aug 16, 2018

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

  • MaintenanceCosts So this is really just a restyled VW Fox. Craptacular tin can but fun to drive in a "makes ordinary traffic seem like a NASCAR race" kind of way.
  • THX1136 While reading the article a thought crossed my mind. Does Mexico have a fairly good charging infrastructure in place? Knowing that it is a bit poorer economy than the US relatively speaking, that thought along with who's buying came to mind.
  • Lou_BC Maybe if I ever buy a new car or CUV
  • Lou_BC How about telling China and Mexico, we'll accept 1 EV for every illegal you take off our hands ;)
  • Analoggrotto The original Tassos was likely conceived in one of these.