Tesla faces criminal investigation over Elon Musk’s ‘funding secured’ tweet and other remarks
US federal prosecutors opened a fraud investigation over Musk’s tweets in early August that he was contemplating taking Tesla private and had “funding secured” for the deal, an insider has said
Tesla Inc. is under investigation by the Justice Department over public statements made by the company and CEO Elon Musk, according to two people familiar with the matter. The criminal probe is running alongside a previously reported civil inquiry by securities regulators.
Federal prosecutors opened a fraud investigation after Musk tweeted last month that he was contemplating taking Tesla private and had “funding secured” for the deal, said the people, who were granted anonymity to discuss a confidential criminal probe. The tweet initially sent the company’s shares higher.
The investigation by the US attorney’s office in the Northern District of California follows a subpoena issued by the Securities and Exchange Commission seeking information from the maker of electric cars about Musk’s plans to go private, which he has since abandoned.
The criminal inquiry is in its early stages, one of the people familiar with the matter said. Justice Department probes, like the civil inquiries undertaken by the SEC, can take months. They sometimes end with prosecutors deciding against bringing an enforcement action.
Tesla didn’t have an immediate comment. Abraham Simmons, a spokesman for the US attorney’s office in San Francisco, declined to comment.
SEC enforcement lawyers in the San Francisco office were already investigating Tesla before Musk sent his tweet on taking the company private. The existing probe focuses on whether Tesla had issued misleading pronouncements on manufacturing goals and sales targets, according to two people familiar with the matter.