Tesla, Theranos, Yahoo!: SEC's San Francisco Office Keeps Busy
(Bloomberg) -- The U.S. Securities and Exchange Commission’s San Francisco office is no stranger to high-profile tech cases -- with the firestorm swirling around Tesla Inc. just the latest to involve the regional unit.
The office, whose attorneys are said to have made inquiries about the electric-carmaker’s public statements, is at the epicenter of efforts by Wall Street’s main regulator to police Silicon Valley. It’s been engaged in some of the SEC’s most high-profile cases this year including fraud charges against blood testing startup Theranos Inc. and a massive data breach at Yahoo! Inc. (now known as Altaba Inc.).
The tech hub and its multi billion-dollar, fast-growing companies have attracted increasing interest from regulators over the past few years. Mary Jo White, the former SEC chair, rattled tech investors in a speech at Stanford University in 2016 when she said some companies may not be taking proper precautions to protect shareholders.
Bloomberg News reported on Thursday that SEC enforcement attorneys in the San Francisco office were already gathering general information about Tesla’s public pronouncements on manufacturing goals and sales targets before Chief Executive Officer Elon Musk tweeted Aug. 7 about taking the company private. The SEC inquiry is preliminary and won’t necessarily lead to anything more formal.
Securities lawyers have said a key focus of the SEC’s expanding review will likely be trying to figure out whether Musk was telling the truth when he said that he’d secured funding for a potential buyout of Tesla. Musk hasn’t offered evidence to back up his claim.
Bloomberg News, citing people familiar with the matter, reported Aug. 10 that deliberations over financing were at an early stage and that Tesla hadn’t formally hired a bank to work on the process. Musk and his advisers are seeking a wide pool of investors to back any deal to take the company private to avoid concentrating ownership among a few large holders, said the people, who asked not to be named because the details aren’t public.
A Tesla representative didn’t immediately respond to a request for comment on the Bloomberg report. SEC officials have declined to discuss any examination of Tesla.
The SEC’s San Francisco-based lawyers oversee a swath of territory spanning from the Pacific Northwest to Northern California. If the agency is even looking into something related to a tech company, there’s a good chance San Francisco is involved. Here are more details on its work earlier this year:
- Theranos. The San Francisco office oversaw the investigation that led to the SEC accusing Elizabeth Holmes, the company’s founder, of fraud in March. To settle the charges Holmes agreed to pay a $500,000 fine and be barred from being an officer or director of a public company for 10 years.
“The Theranos story is an important lesson for Silicon Valley,” Jina Choi, the office’s director, said in a statement at the time. “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”
- Altaba Inc. The San Francisco office supervised a probe into whether the company properly let people know about a massive data breach. In April, Altaba agreed to pay $35 million to settle charges that it misled investors by not coming clean about a hack until two years later.
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