- The Securities and Exchange Commission made an inquiry into Tesla about whether one of Elon Musk's tweets regarding the possibility of taking the company private was truthful, The Wall Street Journal reported Wednesday.
- According to the publication, the SEC is also looking into why Musk's first statement about the potential of taking Tesla private was made on Twitter instead of in a regulatory filing.
- The agency also asked the company whether it believes Musk's tweet follows SEC rules about protecting investors, The Journal reported.
- "Am considering taking Tesla private at $420. Funding secured," Musk said on Tuesday via Twitter before issuing a formal statement on Tesla's website.
- The SEC declined Business Insider's request for comment, and Tesla did not immediately respond to a request for comment.
The Securities and Exchange Commission made an inquiry into Tesla about whether one of Elon Musk's tweets regarding the possibility of taking the company private was truthful, The Wall Street Journal reported Wednesday, citing people familiar with the matter.
According to the publication, the SEC is also looking into why Musk's first statement about the potential of taking Tesla private was made on Twitter instead of in a regulatory filing. The agency also asked the company whether it believes Musk's tweet follows SEC rules about protecting investors, The Journal reported.
The SEC declined Business Insider's request for comment, and Tesla did not immediately respond to a request for comment.
"Am considering taking Tesla private at $420. Funding secured," Musk said on Tuesday via Twitter before issuing a formal statement on Tesla's website.
Tesla's share price surged after the tweet, rising by as much as 12%, to over $381, before trading closed.
No details about funding have been disclosed though. And according to Musk's statement, no final decision has been made. And that has some experts raising an eyebrow.
James Rosener, a partner at the law firm Pepper Hamilton, told Business Insider that Twitter was not the right medium for a securities disclosure since the platform's 280-character limit prevented Musk from disclosing enough information relevant to investors — including the structure of the deal, its tax impact, and the amount of debt it would require — to ensure he's not misleading them.
According to Rosener, Musk's tweet likely ran afoul of the SEC's anti-fraud rules.
"There's definitely material omissions," Rosener said. "Clearly, it was not what any lawyer with any experience in this kind of stuff would advise to put out."
—Elon Musk (@elonmusk) August 7, 2018
