Tesla faces investigation over Musk’s statements
Privatization tweets spurred fraud probe
WASHINGTON— Tesla Inc. is under investigation by the Justice Department over public statements made by the company and chief executive officer Elon Musk, according to two people familiar with the matter. The criminal probe is running alongside a previously reported civil inquiry by securities regulators.
Federal 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.
Tesla confirmed it has been contacted by the Justice Department.
“Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been co-operative in responding to it,” the company said in a statement released Tuesday following Bloomberg’s re- port of the investigation.
“We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”
The investigation by the U.S. Attorney’s Office in the Northern District of California follows a subpoena issued 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.
The 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 any charges.
Abraham Simmons, a spokesperson for the U.S. Attorney’s Office in San Francisco, declined to comment.
SEC enforcement attorneys in the San Francisco office were already investigating Tesla before Musk sent his tweet on taking the company private, Bloomberg reported Aug. 9.
The existing probe focuses on whether Tesla had issued misleading pronouncements on manufacturing goals and sales targets, according to the two people familiar with the matter.
It’s 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 business.