Tesla Faces DOJ Criminal Probe Over Elon Musk Post On Twitter

Tesla Under DOJ Investigation Over Elon Musk Tweet
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Tesla is facing a criminal probe by the Department of Justice over public statements made by the company’s CEO Elon Musk last month.

Citing two people familiar with the matter, Bloomberg said that federal prosecutors opened a fraud investigation following a tweet that Musk posted on Aug. 7. The criminal probe is being conducted along with a previously reported civil inquiry by securities regulators.

In his Twitter post, Musk said that he was considering to make Tesla private at $420 and proclaimed that he had secured funding for the deal.

Musk’s proclamation sent Tesla’s shares higher, growing the company’s market cap by nearly $4 billion until trading was halted.

Tesla’s fortune, however, saw a sharp drop of more than 4 percent Tuesday. Tesla’s market cap now sits at about $48 billion, more than $10 billion less than last month.

Tesla admitted that it was contacted by the DOJ. In a statement the company released following report of the investigation, Tesla said that it received a voluntary request for documents from the DOJ.

Tesla DOJ Criminal Probe Over Elon Musk Post On Twitter
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The company said that it is cooperative with its responses to the department albeit it has yet to receive a request for testimony, subpoena, and other formal processes.

“We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received,” Tesla said in its statement.

The specific scope of DOJ’s inquiry is not known but prosecutors in investigations such as this may look at a company’s accounting practices, the accuracy and adequacy of public disclosures, and if the executives of the company sought to mislead investors.

Justice Department investigations can take months and the criminal inquiry is still in its early stages. These probes sometimes end with prosecutors deciding whether or not to bring any charges.

The New York Times also reported that Securities and Exchange Commission has sent subpoenas to Silver Lake and Goldman Sachs. Tesla engaged both companies to help evaluate the idea of taking Tesla private. The two financial institutions have received subpoenas that demand materials about their interactions with Tesla, according to sources briefed on the subpoenas.

On Aug. 24, Musk issued a statement, saying that Tesla will remain public.

“I met with Tesla’s Board of Directors yesterday and let them know that I believe the better path is for Tesla to remain public,” the billionaire said in the statement. “The Board indicated that they agree.