US regulators examining Musk’s tweets on taking Tesla private

NEW YORK: US regulators are asking Tesla Inc why Chief Executive Elon Musk announced his plan to take the electric carmaker private on Twitter and whether his statement was truthful, the Wall Street Journal reported on Wednesday.
Musk announced his plan on his personal Twitter account on Tuesday, and the US Securities and Exchange Commission has asked Tesla about the facts of the matter, why it was disclosed on Twitter rather than in a regulatory filing and whether it believed investor-protection rules had been met, the Journal said.
The agency declined to comment and Tesla did not immediately respond to requests for comment.
Tesla shares fell 2.4 per cent to $370.34 on Wednesday after closing up 11 per cent on Tuesday, ending about $50 per share below what Musk said he was considering offering.
Tesla’s board of directors said on Wednesday it will evaluate chief executive Elon Musk’s proposal to take the electric car maker private.
After Musk last week raised the idea as a better solution for Tesla’s long-term growth, directors met “several times” and are “taking the appropriate next steps to evaluate this,” the board said in a brief statement issued before the stock market opened.
Musk had dropped the surprise plan in a terse tweet, saying, “Am considering taking Tesla private at $420. Funding secured.”
He has not provided details or evidence of the funding by Twitter or in a following blog posted on the Tesla website, and several securities attorneys said Musk could face investor lawsuits if it was proven he did not have secure financing at the time of his tweet.
“The words ‘financing secured’ are the danger point — that’s a statement of fact and could set him up to be accused of a material misstatement if it’s proven false,” said Erik Gordon, an assistant professor at University of Michigan’s Ross School of Business with a background in law.
Using Twitter to announce materially important information is not common, but the SEC allows companies to use social media to announce key information in compliance with its fair disclosure rules if investors are alerted about which outlets will be used. — Reuters