Musk’s tweets spark criminal investigation in the latest setback for Tesla
The US Justice Department is investigating Tesla over CEO Elon Musk’s tweets about taking the company private.
The news: Shares in the company soared in early August after Musk said on Twitter that he had the “funding secured” to go private at $420 a share, a claim that now seems to have been overstated. The Justice Department has opened a “criminal probe,” into the statements, Bloomberg reported on Tuesday. Tesla confirmed to The Wall Street Journal that it had received a "voluntary request for documents" from the DOJ, but that it has not yet received a subpoena.
Wasn’t Musk already under scrutiny? Yes, but that was from the Securities and Exchange Commission, which subpoenaed Tesla in August to see if Musk actually had secured funding. The SEC is also examining how Tesla informed investors about production delays with its Model 3 sedan.
Why this matters: Unlike the SEC, the DOJ has criminal authority. The DOJ probe, along with the production challenges and a libel lawsuit filed against Musk on Monday, presents serious distractions at a tenuous time for Tesla, which remains unprofitable eight years after its initial public offering. The disruptions could undermine the momentum in electric vehicles, which experts view as an essential component of the strategy to cut global emissions.