Tesla's record buyback may be subject to investigation

Elon Musk's unprecedented tweet announcement of the largest Tesla buyout in history, as everyone expected, raised questions from US regulators. The Securities and Exchange Commission (SEC) began checking the accuracy of the businessman's messages about his intention to make Tesla a private company. If it turns out that Musk misled shareholders with his statements, an investigation could be launched against him and his company, reports the WSJ.

Details

• SEC officials want to know if Musk had factual grounds for tweeting about a possible delisting of Tesla, sources familiar with the matter told the WSJ. If regulators suspect that Musk provided false information or misled shareholders, law enforcement agencies will begin to check the company. American law states that companies and their top managers must not mislead shareholders about significant events for the organization.
• Musk could also get into trouble if regulators prove that he made his statements to spur Tesla's stock price up. After tweets about the delisting, the company's stock jumped from $340 to $380, up 11%. Now the paper costs $370.
• In a tweet, Musk wrote that "funding [of the deal] is already secured." Officials can ask for agreements that Tesla has signed with its financial partners or investors regarding plans to buy back the company's shares, says former New York Stock Exchange chief Thomas Farley. “If the issue of financing is agreed, then there should be documents that confirm this,” he notes.
• Several members of the company's board of directors previously said that Musk spoke to them last week about delisting the company. "He also talked about how being a private company "would better serve Tesla's long-term interests, as well as the funding that would be needed to do so," Tesla independent directors Brad Bass, Robin Denholm, Ira Iranpris, Antonio said in a statement. Gracias, Linda Johnson Rice and James Murdoch (CEO of 21st Century Fox and son of media mogul Robert Murdoch).
• There is no violation in the very disclosure of important information on Twitter. The SEC allows companies to disclose information on social media, but only if its shareholders know that they can use these channels to obtain information about the company. Tesla warned investors back in November 2013 to keep an eye on Musk's tweets.

Context

• On Tuesday, Elon Musk stunned the market with a bizarre tweet about what he's going to do with Tesla going private if its stock rises to $420 a share. Later it turned out that the billionaire was really not joking and was really going to make a record delisting in history at a Tesla valuation of $82 billion, given the debt. presses, forcing to make momentary, not strategic decisions. In addition, publicity gives a large number of people an incentive to try to attack the company and harm it.
• Musk has said several times that the funding for the deal has already been secured. It is not clear by whom, but before the businessman's first tweet, it became known that the sovereign wealth fund of Saudi Arabia acquired a several percent stake in Tesla, paying about $ 2 billion for it.

Liana Faizova