Elon Musk faces probe over tweet on taking Tesla private

Tesla chief executive Elon Musk surprised markets on Aug 7 by announcing on Twitter that he wanted to take the electric automaker private at US$420 a share, causing the stock price to jump. He later backed off talk of going private, saying the compan
Tesla chief executive Elon Musk surprised markets on Aug 7 by announcing on Twitter that he wanted to take the electric automaker private at US$420 a share, causing the stock price to jump. He later backed off talk of going private, saying the company will continue to be publicly traded. PHOTO: AGENCE FRANCE-PRESSE

Shares drop on news of criminal investigation by US authorities

SAN FRANCISCO • Tesla confirmed on Tuesday that US Department of Justice (DOJ) officials were looking into possible criminal aspects of a seemingly spontaneous, and later aborted, announcement by chief executive Elon Musk on taking the electric automaker private.

Shares skidded as word spread of a criminal investigation triggered by Mr Musk's Twitter comments. Tesla shares ended the formal Nasdaq trading day down 3.35 per cent to US$284.96.

Tesla said it was confident the matter would be quickly resolved with the Justice Department.

"Last month, following Elon's announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it," the California-based company said.

"We have not received a subpoena, a request for testimony or any other formal process."

A lawsuit filed earlier this month accuses Mr Musk of trying to "burn" short-sellers by falsely tweeting that funding had been secured to take the company private.

Mr Musk surprised markets on Aug 7 by announcing on Twitter that he wanted to take Tesla private at US$420 a share, causing the stock price to jump. Short-sellers bet on share prices dropping.

Normally, such a major announcement - like taking a huge company private - would be explained in detail earlier to regulators.

Mr Musk has since backed off talk of going private, saying the company will continue to be publicly traded. US market regulators are also scrutinising what happened.

A number of executives have left Tesla of late.

The company said last week that finance executive Justin McAnear is leaving as Tesla strives to become profitable by the year end.

Word that Mr McAnear was heading for the off-ramp followed chief accounting officer Dave Morton's departure after just a month on the job, citing the company's frenetic pace. Mr Morton's brief tenure with the company coincided with the aborted go-private push.

Mr Musk has also been criticised for other unorthodox behaviour, including appearing on a podcast smoking marijuana and giving a tell-all interview to The New York Times, in which he admitted to feeling overwhelmed and unable to sleep over Tesla's ambitious electric car production targets.

On Monday, British caver Vernon Unsworth filed a defamation suit against Mr Musk for calling him a "pedo guy" and "child rapist" on Twitter in a bizarre spat over the cave rescue in Thailand of boys from a football team and their coach.

Despite the myriad controversies, Mr Musk continues to have a strong following among many investors, and Tesla's market capitalisation remains well above that of Ford and only slightly behind that of General Motors.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on September 20, 2018, with the headline 'Elon Musk faces probe over tweet on taking Tesla private'. Print Edition | Subscribe