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Tesla said Tuesday that the Justice Department had asked for documents from the company after its chief executive, Elon Musk, announced abruptly that he had planned funds to convert the publicly traded electric car manufacturer into a private company.
The request for information suggests that the Justice Department has opened a preliminary inquiry into Mr. Musk's Twitter post, which is changing rapidly on 7 August, regarding the potential buyout.
The Justice Department's investigation, combined with the intensification of the Securities and Exchange Commission's investigation into Tesla's practices and communications, has significantly increased the risks to the struggling company. Tesla is already under intense financial pressure, with shares down 25% since the beginning of August, and government investigations are introducing the possibility of costly penalties or other penalties.
Tesla said in its statement Tuesday that it received the request from the Ministry of Justice last month and "cooperated to respond." The company released the statement after Bloomberg News announced that federal prosecutors had opened an investigation.
The Justice Department's investigation is currently being conducted by the US Attorney's Office in San Francisco, according to a person familiar with the case. It is unclear whether the investigation is criminal or civil or whether it is at such an early stage that the matter has not been resolved.
Although the scope of the Department of Justice investigation is not known, prosecutors in investigations such as this one could examine a company's accounting practices, the adequacy and accuracy of its public disclosures and determine if the leaders
Tesla said the Department of Justice's request was not a subpoena but rather a "voluntary request for documents". The company added, "We respect DOJ's desire to obtain information about this and the information they received. "
Investigators at the San Francisco office in San Francisco examine whether Tesla misled investors production objectives. They are also studying Mr. Musk's tweet, in which he says he has "guaranteed financing"To take private business for $ 420 per share.
The tweet blinded Tesla's board and sparked a rally of Tesla's actions. It soon became clear that Mr. Musk had failed to secure the billions of dollars in external financing needed for such an agreement. He also did not retain a bank to participate in the fundraising process.
Mr. Musk said later in August that he was the idea of converting Tesla into a private company.
As part of the investigation, the SEC According to people informed about subpoenas, last month, subpoenas were sent not only to Tesla, but also to financial institutions hired to explore the transaction. privatization. Goldman Sachs and Silver Lake, a large investment firm, both received subpoenas asking for materials about their interactions with Tesla, people said.
It is unclear whether the Department of Justice investigation, like that of S.E.C, addresses a wide range of questions to Tesla or in particular the circumstances surrounding Mr. Musk's Twitter message.
Mr Musk and the company he helped to found have recovered from crises into self-inflicted crises in recent months.
The Tesla plant in California has had serious production problems and the company is rapidly burning up its cash. Mr. Musk has faced many so-called short sellers, who are betting that Tesla's stock will fall. The chief accountant of the company resigned after a month of work. Mr. Musk appeared to be smoking marijuana during a recent video interview. He was sued this week by a British cave rescuer whom Musk accused of being a pedophile.
As pressure builds, Mr. Musk has retained his own lawyers to represent him in the government's investigations, independently of the law firms hired by the company and its board of directors.
Hughes Hubbard & Reed's lawyers – including Roel C. Campos, an ex-commissioner – represents Musk as part of the S.E.C. investigation, according to three people familiar with the deal. Musk also hired Steven Farina, a partner at Williams & Connolly, who specializes in government investigations and bad accounting practices, to represent him, two people said.
A request for documents from a US Attorney's Office would often be a sign of a criminal investigation. But federal prosecutors sometimes do civil and not criminal cases. They usually do so when the behavior they are investigating does not clearly violate a criminal law or when the main purpose of prosecutors is to prevent a person from behaving in a specific way. Civil suits also have a lower burden of proof than criminal cases.
News of the Justice Ministry investigation has dropped Tesla's shares by more than 3% on Tuesday.
David Gelles contributed to the report.
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