SEC Sends Subpoena to Tesla in Probe Over Musk Tweets
Musk&#x27;s &quot;funding secured&quot; tweet was incredibly irresponsible. Subsequent elaborations by Musk himself showed he had, at most, an initial expression of interest by potential buyers.<p>That tweet is at best an impulsive, reckless, perplexing action by a chief executive who should have known how to stay on the right side of securities law. At worst, it&#x27;s an emotional attempt to fend off, possibly even cause direct financial loss to his many critics and short-sellers.<p>This doesn&#x27;t look good for him. This is the key paragraph in the article that makes it serious:<p>&gt; The subpoenas indicate senior SEC officials have authorized a formal investigation of the company, a step up from the initial inquiries the regulator made to Tesla last week. The SEC opens formal investigations when it thinks a violation of law has occurred and that a probe is justified given the nature of the suspected misconduct and the potential harm to investors.<p>Unless Elon can suddenly show he had credible funding secured - contrary to his own blog post of last week - this looks like a strong case for the SEC:<p>&gt; “The release issued earlier Monday clearly raised at least as many questions as it hopes to answer. The probability that there will be an SEC enforcement action is, I think, quite high,” said Joseph Grundfest, a law professor at Stanford University and a former SEC commissioner.<p>&gt; Other experts agreed. John Coffee, a securities and corporate law professor at Columbia University, said the SEC can credibly argue that Mr. Musk’s tweet last week, which caused Tesla’s stock price to jump 11% the day he posted it, didn’t give shareholders the full picture they needed.<p>&gt; “This is a clear statement that he has nothing more than an expression of interest as opposed to a binding commitment,” Mr. Coffee said. “It will tell the SEC that they have a virtually open-and-shut case if they wish to sue.”<p><a href="https:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;musks-tweets-on-tesla-buyout-face-scrutiny-after-saudi-disclosure-1534244400" rel="nofollow">https:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;musks-tweets-on-tesla-buyout-fa...</a><p>Besides the SEC, which can lead to both criminal and civil prosecution, there are also civil lawsuits filed in this case - three of them so far:<p><a href="https:&#x2F;&#x2F;www.businessinsider.com&#x2F;tesla-hit-with-new-lawsuit-alleging-elon-musk-manipulated-stock-price-2018-8" rel="nofollow">https:&#x2F;&#x2F;www.businessinsider.com&#x2F;tesla-hit-with-new-lawsuit-a...</a>