SEC is looking into Musk’s ‘going private’ tweet, report claims

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Well, this didn’t take long. 

According to a report by the Wall Street Journal, the U.S. Securities and Exchange Commission (SEC) is looking into Tesla CEO Elon Musk’s recent tweets, in which he announced that Tesla is looking to go private. 

The report, which cites people familiar with the matter, claims that the SEC is particularly interested in whether Musk’s tweet was based on facts at the time of publishing. 

On Tuesday, Musk tweeted that he’s “considering” taking the company private at the stock price of $420, roughly 20% above its trading price at the time and valuing the company at over $70 billion. He also tweeted that funding is “secured” and that investor support is “confirmed.” The tweet sent the company’s stock price soaring 11% before trading was briefly halted.

Making an announcement like this in a tweet is unorthodox but not necessarily illegal — unless it wasn’t based on facts and its purpose was purely to manipulate the stock price.  

A few directors of Tesla’s board said Wednesday that Musk met them several times last week to discuss the idea, so Musk’s tweet definitely wasn’t out of the blue. 

But SEC will likely look into whether Musk had full investor support and whether funding was secured before the announcement.

In a letter to employees, shared publicly about an hour after his tweet, Musk explained the reasoning behind the announcement. “I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible,” he wrote. The letter didn’t have any additional information on the source of funding for the move.