Tesla likely to face SEC investigation following Musk tweets amid debate of market manipulation
S E E D E D C O N T E N T
Elon Musk's lawyers are probably pouring over rule 14e-8 of the Securities Exchange Act of 1934 right about now.
That regulation is the one the Tesla CEO may or may not have violated when he sent the markets into a frenzy and halted trading of Tesla's shares after nonchalantly tweeting Tuesday that he was thinking about taking the electric car company private and had "funding secured," securities lawyers say.
Whether it was an impulse tweet or not, it's likely that the Securities and Exchange Commission has already opened an investigation and is looking for documentation to back up Musk's comments, former SEC enforcement lawyers say.
The Wall Street Journal reported Wednesday that the SEC has, in fact, "made inquiries" to find out whether his claim was true, citing people familiar with the matter.
"I can't imagine that the enforcement division hasn't opened a file, that they are not calling his counsel or him and saying 'we would like whatever papers you have about this, if you have written anything down, if you have talked to lenders, if you have materials about that we would like to see them,'" said Tom Gorman, a former senior enforcement attorney with the SEC and a partner at Dorsey and Whitney in Washington, D.C. "'And right after we have finished seeing all that stuff, we would like to talk to you.'"
Investors aren't so convinced that Musk has actually secured funding. If not, that would spell big trouble for both Musk and his company.
"There is skepticism as to where this money comes from. It doesn't make sense," Efraim Levy, an analyst at CFRA, told CNBC. "The reason it is trading at a discount is because of uncertainty as to whether the deal will come to fruition. If it doesn't come through, the stock is going to crater."
The SEC's rule 14e-8 basically prohibits publicly traded companies from announcing plans to buy or sell securities if executives don't intend to follow through, don't have the means to complete the deal or are flat out trying to manipulate the stock price.
§ 240.14e-8 Prohibited conduct in connection with pre-commencement communications.
It is a fraudulent, deceptive or manipulative act or practice within the meaning of section 14(e) of the Act ( 15 U.S.C. 78n) for any person to publicly announce that the person (or a party on whose behalf the person is acting) plans to make a tender offer that has not yet been commenced, if the person:
(a) Is making the announcement of a potential tender offer without the intention to commence the offer within a reasonable time and complete the offer;
(b) Intends, directly or indirectly, for the announcement to manipulate the market price of the stock of the bidder or subject company; or
(c) Does not have the reasonable belief that the person will have the means to purchase securities to complete the offer.
"He is claiming there is a specific source of the funding so that had better be true. He has also claimed there is a specific amount available for funding. That has to be true. Otherwise, even if it's not manipulation it would be fraud so he's got two potential areas of difficulty right there," former SEC Chairman Harvey Pitt told CNBC.
Tesla still hasn't said where it's getting the more than $71 billion it would cost to take the company private. Wall Street bankers also don't know, suggesting Musk has secured financing elsewhere. But that seems implausible given the size of the deal, which would require multiple banks, and cult-like interest in Tesla, dealmakers and analysts say.
"News of the deal would have leaked had Tesla already held discussions to secure funding," UBS analyst Colin Langan wrote in a research note Tuesday.
Tags
Who is online
68 visitors
Musk keeps stepping n it, between the problems with the '3', calling a hero rescuer a pedophile and now this. Seems like he's coming apart at the seams. Who exactly is going to invest $71B into taking his company private when there are obvious issues (production/layoffs)?
I read an article last week that Musk signed a deal to build his cars in China. I imagine that the Chinese are having second thoughts since stability is very important to them and from what Musk has been doing and saying sure leaves that stability in doubt.
A good point. Plus, someone who is already on questionable ground with the SEC....certainly could complicate that relationship.........
or the Chinese will gladly give him the money and add him to the string of pearls, keeping his technologies........
Based on some previous Chinese business practices, they would be more likely to buy one of each model, take it apart and build their own tech off of it.
I owned an old Jag xk120 and was way too familiar with the downdraft carbs, aluminum panels, British metric hardware and oxidizing fittings.
Eventually I traded it for a 240Z - remarkably it was almost as uncomfortable as the Jag, but a sleek model and had a dry interior.
Almost as incredible I came across an Austin Healey and had to have it.
Side by side the cars measurements and weights were identical. Only the fittings were improved on the Nissan.
Turns out, Datsun (Nissan ) bought a Jag 120 and an Austin Healey Mark II and reverse engineered them to the more modern sportscar, the 240.
The Nissan carbs, also downdrafts suffered from vapor lock for years, before i switched hoods to a vented 260 style and sold the car to some unsuspecting......
Kept the Healey for many years, primarily because it was a convertible, but it was just a phase, never, never again, lol
Never used mercury manometers, started out trying to use vacuum meters with mixed results.
We were all members of the Jag club and experimented with various motor oils and eventually settled on common red automatic transmission for the dampers.
Less expensive than anything else, good damping qualities, no loss if spilled or leaked.
I learned in the late 60's to tune Carters and Quads by ear, so downdrafts were never much of a challenge if you could hear them. ie., not in a noisy shop.
We had a large drill press and a supplier for oversized butterfly shafts and those plastic paper bearing/gaskets
which fixed most issues with most of our downdraft vacuum leaks.
The Koreans did the same thing at Hyundai. It is how they were able to go from a Quality Control joke to one of the top car companies in sales in the U.S.
While stationed on Okianawa, I had a 72 Corona SL, 2 door sedan with a 1700cc high compression engine with a 4 speed, came from the factory with dual side draft S/U carbs. Had a buddy (and race partner) that could tune the carbs by ear. They were simple to pull down, take apart, clean and reassmble. A couple runs to the red line in 1st and 2nd and he would take his stubby screwdriver and get out and adjust them......we won a lot of street races with that car.......
As did Kia. I have a Kia Sorento and it's amazing the quality in the SUV at a very acceptable price.
When I had my body and spray shop, Kia's and Hyundai's were terrible.
These days, when I rent a car I insist on a Hyundai Elantra.
We had a 240, beautiful car, and tons of fun to drive(it was a stick shift)! No room for the kids though LOL
Hubs does body work as well. He hates working on those things and German cars too
I had a 240 SX in 1992. Was a nice car, I bought it while consolidating from 3 cars to 1 car (the Air Force was sending me over to Turkey). I ended up trading it in in 95 on my 3rd Gen RX-7.
I think hubs was a "93 too. It was beautiful and so clean! He bought it in 99 before our oldest was born. We hung on to if for a bit but he go in an accident. It wasn't bad, but we were able to sell it for the motor for almost 2k. Those motors are in huge demand!
Please, tell me you still have the RX-7.
I do!
I'll have to find some better pics....this is the only one on this computer.......She qualifies as an antuque this year!
KIA and Hyundai are basically the same company.
Like Dodge and Plymouth used to be, they are all the same under the sheet metal.
The parts Division for Northa America sells the same parts with the same part numbers for 3 different prices,
grey boxes are for Mobis, the parent company, Red boxes are Kia parts and the blue or blue & grey boxes are Hyundai.
I love those cars.
When I had my shop, some woman brought one in to change it from the factory white to a Lexus pearl white. It's a pretty color, but I hate doing that to such a car.
Admittedly it was very pretty after we finished with it.
Mine was a rare Automatic trans with no A/C.
Didn't matter, it locked up with vapor lock every summer.
It was so long ago (1973) that the factory wouldn't do any warranty work or the extensive recalls ( insulating the fuel lines )
because I was the 2nd owner.
This one has it's original paint (Mostly). Suffered a lot attendent backing a truck into it while in for servicing at a Mazda Dealership in Hampton, Virginia. I am trying to retrieve some more pics after I had it professionally detailed last year. For silver, the color oxidation is minimal, though it does show that it's a driver.....since it's now 25, can I call it a survivor car?
This is going back some years, but my nephew and I came up with a very good cure to this situation.
Do you recall those GM cars with diesel engines based on Olds 350 block conversions? Not one of their better ideas.
My nephew came across a beautiful early 80s Grand Prix with one of those engines that had crapped out, for pretty much nothing.
It was decked out with pretty much all options.
He had a bunch of SBC parts laying around and we built a nice 355, on the peppy side. Different transmission and convertor, different read end, different rear ratio, complete rethinking of the suspension and the ultimate cure for vapour lock.
Custom designed and we designed a combination custom insulating plate and spacer. Then, using the plumbing for a remote mounted fuel filter, the A/C lines, some appropriate insulation and some attachment/mounting blocks/brackets we fabricated, ran the fuel delivery line from the remote filter to the carb in direct contact with the cold A/C line.
Never had a vapour lock problem in the heat of summer. That was a nice car and a good sleeper.
That car is a keeper. You can call it anything you want.
Nice. Very creative.
Eventually the front end was wrecked and we put a 260 front end on it from salvage yard and my buddy at the BS called and said
the hood is vented, do you still want it?
Hell yeah !!! the other cure for vapor lock !!!
Thank will get the heat out.
Nice!!!! not about the AC though, I live in Ga, and thats a must!!!!!
Ha ! in the 70's most cars came from the factory with no A/C - we added it at the dealership.
Ugly times, lol
Do you think now would be a good time to buy some Tesla stock?
LOL.......well, only if you need to show some losses on your taxes......
I guess I don't understand how the stock market works. If he's going private, won't he need to buy back all the stock that's in public hands? Ergo...TG buys 100 bucks worth and Musk buys it back for 25 dollars! Right?
Problem is, they are going to have to suspend the stocks from trading as what he did could be leveraged to lower the value of the stock or make it skyrocket, dependent on the whilms of the market.....if he gets in big trouble, the buyback won't happen and the stocks will tank, especially with Tesla's continuing production anf safety problems.
crap
Guess I have to keep working
You and me both..