US Securities and Exchange Commission is looking into whether Elon Musk broke the law because of what he announced on Twitter.
Elon Musk is no stranger to controversy. You might even say he cultivates it as a self-described “disruptor” in just about every field on which he steps foot. But this time he may have landed him in even hotter water than he's accustomed to, drawing the typically unwanted attention of the US federal government's top corporate watchdogs.
According to the Wall Street Journal, Musk's latest pronouncements on Twitter have been noticed by no less a powerful organization than the Securities and Exchange Commission. And what it wants to know is whether his statements were truthful or not.
The statements into which the SEC is reportedly looking arose when Musk tweeted on Tuesday that he was preparing to take Tesla private – in other words, buying out the stock that's currently traded on the open stock market. Musk presented the prospect not as a possibility or even as a threat, but as a fait-accompli, indicating that he already had the financial backing in place to make the move.
The founder and chief executive of the electric vehicle manufacturer said he (and his backers) would pay $420 per share for a total of $72 billion – 20 percent more than the shares were worth before the statement, and 11 percent higher than it closed trading that day following the announcement.
If Musk does indeed have the wherewithal to back up his claim, he'd ostensibly be in the clear from any SEC investigation. But if he doesn't, it could be interpreted as stock manipulation and put the divisive figure in hot water.
“If funding is certain, there is documentation to demonstrate that,” Thomas Farley, a former president of the New York Stock Exchange, told the WSJ. “This is a very easy one to manage, and they should manage it.”
Musk had reportedly met with several independent board members and large shareholders about the possibility, presenting it in the best interest of the company's long-term growth. It's not known, however, whether he received their approval, much less their financial support.