SEC Inquires into Tesla (NASDAQ:TSLA) about Musk’s ‘420’ Tweet on Taking Company Private
CEO Musk’s ‘420’ declaration in a nutshell
- The US SEC has made an inquiry into Tesla (NASDAQ:TSLA) about whether 1 of Elon Musk’s Tweets regarding the possibility of taking the company private was truthful
- The US SEC is also looking into why Mr. Musk’s 1st statement about the potential of taking Tesla private was made on Twitter instead of the required regulatory filing.
- The US SEC asked the company whether it believes Mr. Musk’s ‘420’ Tweet follows SEC rules about protecting investors
- Tuesday, Mr. Musk Tweeted, “Am considering taking Tesla private at 420. Funding secured,” that before issuing a formal statement on Tesla’s website.
- The SEC declined a request for comment, and Tesla did not respond to a request for comment.
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, and according to Mr. Musk’s statement, no final decision has been made. And that has some experts raising an eyebrow.
It was reported in BI that a partner at the law firm Pepper Hamilton, told the financial press that Twitter is not the right medium for a securities disclosure since the platform’s 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 is not misleading them.
Accordingly, Mr. Musk’s Tweet has likely ran afoul of the SEC’s anti-fraud rules and regulations.
“There’s definitely material omissions,” hes aid. “Clearly, it was not what any lawyer with any experience in this kind of stuff would advise to put out.”
Those of us who cover the automotive sector are confused by Mr. Musk’s Tweets, which he said indicated he had both the funding and the shareholder votes necessary to take the company private.
Tesla’s board released a brief statement Wednesday offering few details besides that CEO Musk met with the board last week to bring up the possibility of going private.
Mr. Musk said via Twitter Tuesday that the deal was contingent on a shareholder vote but that “investor support is confirmed.”
Tesla has been public since Y 2010, but Musk has said in the past that he would like to take Tesla private.
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