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The Ministry of Justice is currently investigating Tesla Inc. over public statements made by the company and its CEO, Elon Musk, according to two people close to the case. The criminal investigation is taking place in parallel with a civil investigation previously reported by securities regulators.
Federal prosecutors opened an investigation into the fraud after Musk tweeted last month that he was considering taking Tesla privately and had obtained "guaranteed funds" for the deal, said anonymous people to discuss a confidential criminal investigation. The tweet initially sent the shares of the company higher.
Investigation by the US Attorney's Office in the Northern District of California follows a summons issued by the Securities and Exchange Commission to obtain information from the electric car maker about Musk's plan to become private, which he has since abandoned.
The criminal investigation is in its infancy, said one of the people familiar with the issue. Department of Justice investigations, such as civil investigations by the SEC, can take months. They sometimes end with prosecutors who decide not to take coercive measures.
Tesla shares reversed earnings and fell 4.4% to $ 282. The stock fell 2.5% to $ 287.60 at 11:45 am in New York and is down about 7.7% this year.
Tesla does not have an immediate comment. Abraham Simmons, spokesman for the US Attorney's Office in San Francisco, declined to comment.
SEC probe
SEC lawyers in the San Francisco office were already investigating Tesla before Musk sent his tweet about privatizing the company, Bloomberg reported on August 9. people familiar with the subject.
It is unclear whether the criminal investigation is as broad. Prosecutors in securities fraud investigations could seek evidence on issues, including whether corporate executives had intentionally lied to investors about the company's health.
Musk exposed August 7 to a legal risk saying that he had funding for a buyout, although this may not have been the case. Almost a week later, Mr. Musk said the basis of his statement was conversations with Saudi Arabia's Public Investment Fund, which had initially expressed interest in helping the company become privately at the beginning. of 2017.
Abandoned effort
Tesla's board then stated that it had not received a formal proposal from Musk, who is also the chairman of the company, and also did not conclude whether being private would be desirable or feasible. Less than three weeks after his first tweets, Musk gave up his efforts.
Now that the Musk tweet has attracted the attention of the Justice Department, investigators could extend their review to other public statements made by the CEO about the company's health, said one of the people. familiar with the subject. Authorities could also look into the circumstances surrounding the resignation of Tesla chief accountant Dave Morton after less than a month of work, the person added.
Morton, a former chief financial officer of computer hard drive manufacturer Seagate Technology Plc, joined Tesla the day before Musk's tweet that he was considering buying out investors at $ 420 a share and taking the private company.
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