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Last Updated : Aug 09, 2018 05:23 PM IST | Source: Moneycontrol.com

SEC questions Elon Musk's tweet on taking Tesla private at $420 a share

The Tesla CEO on Tuesday tweeted that he wants to take Tesla private, and has already secured the funding for the same.

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The US Securities and Exchange Commission (SEC) has made an inquiry into Tesla and SpaceX CEO Elon Musk's recent tweets.

According to a report by CNBC, Musk tweeted on Tuesday that he was mulling over taking Tesla private at a price of USD 420 per share, and that funding for the same had already been secured.

The problem here is that Musk has since provided no information on the source of that funding; USD 420 per share would raise Tesla's value to about USD 71 billion. This is what has caught the SEC's attention and made them question Musk on the authenticity of his statements and why he chose to reveal his plans on Twitter.

Following the tweets, Tesla put up a letter, written by Musk to his employees, saying that the move is aimed at removing unnecessary distractions and attention the company draws from the public.

Use of social media to make corporate announcements has been seen in the past, however, SEC keeps a tab on such actions. In July 2012, Netflix announced on Facebook that it had hit a performance milestone.  The SEC responded by sending a notice to CEO Reed Hastings which said that he could face charges.

In April 2013, the SEC ultimately ruled in favour of Hastings saying that it would allow companies to announce news and updates through social media but only if investors know about it beforehand.

The CNBC report quoted Dorsey and Whitney's Tom Gorman as saying that although Musk is not prohibited from making a statement through social media, as long as it is truthful, any hint of even a minimum false statement could have an obvious impact on Musk, Tesla, and even his other companies.
First Published on Aug 9, 2018 05:23 pm
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