Tesla CEO Elon Musk promised on Aug. 7 he had “funding secured” to take Tesla private for about $420 per share. His words on Twitter may be coming back to haunt him. Bloomberg reported today (Sept. 18) that the US is launching a criminal investigation alongside a civil inquiry, citing two unnamed sources. Federal prosecutors are already examining whether Musk’s comments violate securities law, and a pair of class-action lawsuits have been filed over the matter.
That sent the stock into a freefall dropping more than 4% in a matter of minutes.
Musk’s disastrous bid to take the company private has continued to blow up in his face. On Aug 13, he wrote a blog post laying out a rationale for Tesla as a private company, which prompted an avalance of criticism from investors and analysts. After engaging bankers at Silver Lake, Goldman Sachs and Morgan Stanley to advise him, the CEO backtracked about 10 days later, writing a second post, ”Staying Public,“ in which he admitted “the better path is for Tesla to remain public.” But the damage is likely done.
Still, shortly after the news broke on Tuesday (Sept 18), Musk did not seem overly concerned.
Correction: A previous version of this post stated the SEC is launching a criminal investigation. It’s the US Department of Justice.