SEC Launches Inquiry After Elon Musk Tweets About Taking Tesla Private

Flags fly over the Tesla Inc. Gigafactory 2 which is also known as RiverBend a joint venture with Panasonic to produce solar panels and roof tiles in Buffalo New York

Tesla board mulls de-listing plan

In a statement on Tesla's website on Wednesday, six of Tesla's nine directors said the board had met several times over the last week to discuss such an idea and was "taking the appropriate next steps to evaluate this".

"Am considering taking Tesla private at $420".

Skepticism about the legitimacy of Musk's proposed deal surfaced nearly immediately after Musk dropped the bombshell on his Twitter account a few hours after the stock market opened Tuesday. Second, funding sources for such a transaction are not yet identified nor how much capital would be needed given the expected option for shareholders to participate in the transaction.

That's because Musk tweeted that the financing for the buyout had been locked up without equivocation.

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017.

Midway through the trading session in NY on Wednesday, Tesla shares were down 5% at $374 after surging 11% on Tuesday.

Names excluded from the board statement were Musk; his brother, Kimbal Musk; and Steve Jurvetson, a venture capitalist and early Tesla backer who's been on leave since previous year.

Asked if it could be considered securities fraud if it could be shown he was trying to manipulate the market, Pitt said: "It raises significant questions about what his intent was".

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It's unclear if Musk has misled investors, let alone whether he has done so intentionally.

Musk's use of Twitter to announce a huge deal also raised eyebrows, but that probably didn't violate any laws, Coffee and Henning said. "As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla".

The Journal reported that the securities regulator is looking into the legitimacy of Musk's comments, and why he made the disclosure on Twitter instead of through a formal filing.

Some of the fervor for a Tesla buyout faded Wednesday.

Shares of Tesla skyrocketed Tuesday when the plan was announced, but sank about 1.5% in trading Wednesday. Within minutes, the stock price rose from around $355 to almost $370.

Board members said that Tesla boss Elon Musk and had held several meetings about the move in the past week.

Tesla said on Wednesday the discussions had addressed the issue of how to fund such a deal, but gave no details. He later posted a blog explaining the potential move, saying going private would be the "best path forward" for the Palo Alto, California-based company.

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