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Tesla subpoenaed over Elon Musk's 'funding secured' tweet

Author
Daily Telegraph UK,
Publish Date
Tue, 8 Feb 2022, 4:18pm
Elon Musk tweeted in 2018 that he had "funding secured" to take Tesla private. Photo / Bloomberg
Elon Musk tweeted in 2018 that he had "funding secured" to take Tesla private. Photo / Bloomberg

Tesla subpoenaed over Elon Musk's 'funding secured' tweet

Author
Daily Telegraph UK,
Publish Date
Tue, 8 Feb 2022, 4:18pm

Elon Musk faces a legal challenge after a tweet about Tesla, in a fresh blow for the world's largest carmaker. 

The US stock market watchdog issued a legal request to Tesla in November over its chief executive's infamous attempt to take the company private. 

The Securities and Exchange Commission (SEC) sent the carmaker a subpoena, demanding information about its compliance with a 2018 settlement that forced Musk to step down as Tesla chairman, while remaining chief executive. 

In 2018, Musk tweeted that he had "funding secured" to take Tesla private, sending its share price soaring. It prompted an SEC lawsuit and eventual settlement when it emerged he had not secured financing. 

Both Musk, the world's richest person, and Tesla paid a US$20 million ($30.1m) fine as part of the settlement and the company was told to appoint two independent directors. It was later amended to require Musk to seek legal advice when tweeting information that could be market sensitive. 

"On November 16, 2021, the SEC issued a subpoena to us seeking information on our governance processes around compliance with the SEC settlement, as amended," Tesla revealed in its annual report. 

Since the notorious tweet, Tesla has become the world's most valuable car company with a market value of US$930 billion. 

Musk, a prolific Twitter user, has repeatedly tweeted information about Tesla that some have suggested could break the terms of the settlement. 

The regulator told the company in 2019 and 2020 that Musk's tweets had violated the agreement, saying it had "abdicated the duties required of it by the court's order", according to records obtained by the Wall Street Journal. 

The most recent challenge reignites Musk's war with US regulators. The chief executive has repeatedly sparred with the SEC, referring to it at times as the "Shortseller Enrichment Commission". In 2020 he wrote: "SEC, three letter acronym, middle world is Elon's." 

The go-private saga has also recently become the subject of a lawsuit from JP Morgan, which claims Musk's tweets breached a contract between Tesla and the bank. 

Tesla and The SEC did not respond to requests for comment. 

- by James Titcomb, Daily Telegraph UK