SEC looking into Tesla after Elon Musk's tweets, reports say
Musk may have moved too fast for federal regulators.
Yesterday, Tesla CEO Elon Musk tweeted about potentially taking his company private again to expand long-term planning and, probably, to "own the shorts." But he might have moved a little too fast for the tastes of federal regulators.
The US Securities and Exchange Commission has made inquiries into Tesla in the wake of Musk's tweets, The Wall Street Journal reports. According to the WSJ report, as well as others slowly trickling out of Twitter's financial corner, the SEC is looking into whether or not Musk was telling the truth when he said he'd already secured financing to take the company private. If he was lying or embellishing, that could get him in big trouble with the feds.
The SEC is also reportedly looking into whether Elon's use of Twitter constituted sufficient disclosure. Previous SEC rulings on using social media as a platform to make public announcements of this kind say it's fair game, "so long as investors have been alerted about which social media will be used to disseminate such information." It's known informally as the " Reed Hastings rule," after the Netflix CEO who made a post on his personal Facebook page about Netflix subscriptions, which subsequently sent its share price into the upper atmosphere.
The SEC declined to comment on the reports. Tesla did not immediately return a request for comment.
Musk laid out his reasoning for going private in an email to Tesla employees yesterday, which was subsequently posted on Tesla's website. In short, Musk believes going private can place the focus back on long-term planning, which is currently viewed through the lens of how it will affect short-term quarterly finances. He believes the company will be in a better position to succeed if it's privately held.
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