DOJ’s Tesla (NASDAQ:TSLA) Probe is a Pox on the Company

$TSLA

Right now it is too early to tell where the Department of Justice’s inquiry into Tesla (NASDAQ:TSLA) will lead, but it will likely require the company’s attention for months, perhaps years

Tesla is facing a criminal investigation by the DOJ into public comments the company and its CEO, Elon Musk, made about taking the company private.

The SEC is also investigating the ‘420’ comments.

Tesla said earlier this that it had received and cooperated with a voluntary request for documents from the DOJ but had not received a subpoena.

The DOJ and SEC’s inquiries were reportedly motivated by Tweets Mr. Musk published in August in which he said he had “funding secured” to convert Tesla into a private company and needed only shareholder approval to finalize a deal.

Later reports and statements from Mr. Musk suggested that he might not have had legally binding agreements in place to finance a go-private deal at the time he published the Tweet.

The fact that the DOJ has requested documents from Tesla does not mean the SEC’s reported investigation has uncovered evidence of wrongdoing

Since the SEC’s reported investigation into Mr. Musk and Tesla’s comments about going private is relatively new, it isunlikely the agency has come to any definitive conclusions.

The DOJ’s inquiry does not indicate whether the agency will eventually bring criminal charges against Tesla.

The burden of proof for criminal cases, which the DOJ investigates, is higher than for civil cases, which the SEC investigates.

For the former, illegal activity must be proven beyond a reasonable doubt to warrant a conviction.

For the latter, the SEC only needs to find a preponderance of evidence of wrongdoing to levy fines. Most often, DOJ cases do not end with the agency bringing charges.

The DOJ’s inquiry will not be brief.

Such investigations will likely take months, if not years, and there is always the chance that the agency will discover new elements of the company’s behavior to examine.

The DOJ will look into Tesla until it feels confident that it can determine whether or not Mr. Musk or the company broke the law,  That means the agency’s probe could loom over the company in the coming months.

This will be a Pox on the company for a long time.

Have a terrific weekend

  420, Company, criminal, DOJ, financing, investigation, Musk, private, SEC, secured, Tesla, TSLA, tweet

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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