A Tesla Inc. banner stands at the entrance to the Hornsdale wind farm, operated by Neoen SAS, near Jamestown, South Australia. (Photographer: Carla Gottgens/Bloomberg)

Tesla Receives Subpoena Over Musk's Take-Private Tweet

(Bloomberg) -- Tesla Inc. has received a subpoena from the U.S. Securities and Exchange Commission regarding Elon Musk’s effort to take the company private, indicating the regulatory scrutiny of his statements have reached a more serious stage.

The demand for information, described by a person familiar with the matter, followed Musk’s tweet last week saying he was considering taking Tesla off the market and had “funding secured” for the deal. The electric-car maker’s shares dropped 2.6 percent to $338.69, closing at the lowest since the chief executive officer set off a firestorm last week.

SEC spokeswoman Judith Burns and a Tesla spokesman declined to comment.

Tesla Receives Subpoena Over Musk's Take-Private Tweet

Musk exposed himself to legal risk by tweeting Aug. 7 that he had the funding for a buyout. Almost a week later, the chief executive officer said the basis for his statement was conversations with Saudi Arabia’s Public Investment Fund, which first expressed interest in helping take the company private in early 2017. Tesla’s board has since clarified that it hasn’t received a formal proposal from Musk, who’s also chairman, nor has it concluded whether going private would be advisable or feasible.

“The whole format of his announcement was highly problematic and very unusual,” Harvey Pitt, a former SEC chairman who now leads advisory firm Kalorama Partners, said Wednesday on Bloomberg Television. “You can’t tell a lie.”

Fox Business reported earlier that the SEC sent the subpoena.

Musk also tweeted on Monday that Goldman Sachs Group Inc. and Silver Lake would act as financial advisers, but neither had officially signed on at that point, people familiar with the matter said Tuesday. Goldman Sachs on Wednesday suspended its ratings and price target for Tesla stock, citing its role as an adviser.

Tesla may face potential regulatory challenges beyond the SEC investigation. The company probably will need approval of U.S. national security officials if Saudi Arabia finances the effort to take the company private, and President Donald Trump’s administration has been stepping up scrutiny of foreign investment in American technology.

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