Tesla to be investigated by US Justice Department over Elon Musk tweets

Company suggests it is voluntarily cooperating with Justice Department investigation

Clark Mindock
New York
Tuesday 18 September 2018 23:57
Comments
Mr Musk suggested that he wanted to take his company private, and has been sued by shareholders in response
Mr Musk suggested that he wanted to take his company private, and has been sued by shareholders in response

The Department of Justice has launched an investigation looking at whether Tesla CEO Elon Musk broke the law by musing on Twitter about taking the company private.

The firm was contacted by the Department of Justice after Mr Musk made the comments on Twitter last month in a tweet that spurred theories the tech CEO was trying to communicate he was smoking marijuana because he suggested he would take his company private once shares had reached $420 a share. In the US, the number 420 is associated with April 20, when annual marijuana celebrations take place.

“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 cooperative in responding to it," a Tesla spokesperson told The Independent in an emailed statement.

The spokesperson continued: "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 company has not provided further details about what the Justice Department is interested in, or about an already underway investigation into the company by the Security and Exchange Commission.

But the criminal probe had an impact on Tesla share prices after it was first reported Tuesday afternoon by Bloomberg. Soon after the first report of the probe by the DOJ was announced, Tesla shares fell by 6 per cent. The stock price had rebounded later in the afternoon, however.

Mr Musk’s tweet, on 7 August, came in the middle of the trading day, and indicated he had secured funding for taking the company out of the public sphere. The tweet initially brought the shares up 9 per cent, but they have since declined to roughly 25 per cent below the high achieved following the announcement.

The CEO has since abandoned the idea, and said that his “funding secured” comment came from talks with Saudi Arabia’s sovereign wealth fund. He said that organisation had urged him to take his company private, and that they would invest more in Tesla if he did so.

But the comments resulted in shareholder lawsuits which claim Mr Musk was attempting to manipulate the stock price of his company. The comment also reportedly resulted in investigations being launched by the Securities and Exchange Commission.

The Department of Justice declined to confirm or deny the existence of an investigation into Tesla or Elon Musk.

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