The U.S.Securities and Exchange Commission (SEC) is examining Elon Musk tweets regarding his plans to take Tesla (NASDAQ: TSLA) private, The Wall Street Journal reported Wednesday, citing sources.
The publication also said the SEC is inquiring why Tesla’s CEO made the disclosure via social media rather than in a filing, and if the statement was truthful and not manipulative.
“Am considering taking Tesla private at $420. Funding secured,” Musk tweeted Tuesday afternoon, reaffirming the price with a follow-up tweet 25 minutes later.
Musk, however, has yet to offer any evidence to back up the statement. What’s more, no financial institution or technology firm has come forward publicly, or privately, to say they’re behind the plan’s financing-which based on Musk’s suggested TSLA price-per-share would value a deal at more than $81 billion.
Musk’s initial funding tweet came after a report said Saudi Arabia’s sovereign wealth fund had taken a multi-billion dollar stake in the electric car maker.
It should be noted that at this stage it’s unclear if any laws have been broken. In fact, the Journal said the SEC’s inquiry, which originated from its San Francisco office, suggests Tesla might come under investigation “if regulators develop evidence that Mr. Musk’s statement was misleading or false.” Experts, however, agree that Musk’s shock announcement on social media is unprecedented, and may have consequences.
Former SEC Chairman Harvey Pitt told CNBC on Wednesday that Musk could face criminal and civil penalties if the regulator determines he did not secure financing prior to the time of his tweets.
“If you make a false statement in connection with the trading of securities, you run the risk of both having to pay for the damages you caused and also you run the risk of a criminal prosecution,” Pitt said.
Tesla’s stock jumped 11 percent to $379.57 a share on Tuesday.
The name has since fallen, dropping more than 9 points, or 2.4%, to $370 by Wednesday afternoon, a sign of market skepticism on the feasibility of Musks’s $420 per share buyout plan.
As of writing, Tesla’s stock is changing hands pre-market at $366.70.
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