The Securities and Exchange Commission has sent subpoenas to Tesla concerning the company's plans to explore going private and CEO Elon Musk's statements about the process, Fox Business reports.
Fox Business reporter Charles Gasparino said on Twitter that sources suggested the agency was moving into a formal investigation of Tesla.
The Wall Street Journal reported last Wednesday that the SEC had made an inquiry into Tesla about whether one of Musk's tweets regarding the possibility of taking the company private was truthful. And on Thursday, Bloomberg reported that the agency was "intensifying" its inquiry.
Tesla and the SEC declined Business Insider's requests for comment.
Last week, Musk expressed his desire to take Tesla private in a now-controversial tweet.
"Am considering taking Tesla private at $420. Funding secured," Musk said via Twitter.
Some were confused in the hours and days following the tweet, since Musk did not initially disclose who might provide the funding he mentioned.
The Wall Street Journal reported on August 8 that the SEC had made an inquiry into Tesla about whether one of Musk's tweets regarding the possibility of taking the company private was truthful. On August 9, Bloomberg reported that the agency was "intensifying" its inquiry.
Three lawsuits have been filed against Tesla and Musk alleging securities fraud.
Musk said in a statement on Monday that he used the phrase "funding secured" because he believed there was "no question" Saudi Arabia's Public Investment Fund would provide funding for a deal to convert Tesla into a private company after a July 31 meeting with the fund's managing director. He made the announcement via Twitter, he said, because he wanted all Tesla investors to know about the possibility of Tesla going private at the same time.
But Musk didn't mention any legally-binding agreements that were in place at the time he sent the "funding secured" tweet ("He has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals," Musk said of the Saudi sovereign wealth fund's managing director) and said he was in discussions with the Saudi fund and other investors, which suggested some sources of funding may not have been settled before the tweet was sent.
Musk said all relevant parties would be able to review a proposal before a decision was made about going private. He said a proposal would not be presented, however, until discussions with potential investors were finished.
The Saudi sovereign wealth fund first met with Musk early last year about taking Tesla private, Musk said, adding that they'd met multiple times. After the fund purchased about 5% of Tesla's shares, it requested another meeting with Musk, which Musk said took place July 31. Musk said that during this meeting the fund's managing director "strongly expressed his support" to contribute funding to take Tesla private.
Musk notified Tesla's board of directors of his desire to take Tesla private on August 2, he said. But The New York Times reported on Monday that Musk’s “funding secured” tweet surprised the board, which reportedly had not approved the tweet. According to the Times, Musk told an informal advisor he sent the tweet because he had difficulty keeping information to himself and was frustrated with the company’s critics.
On Tuesday, Tesla said its board of directors had formed a special committee to consider any forthcoming go-private proposals.
Tesla has been public since 2010, but Musk has previously said he would like to take Tesla private.
"I wish we could be private with Tesla," Musk said in an interview with Rolling Stone published in November. "It actually makes us less efficient to be a public company."
Last week, Musk said taking the company private was "the best path forward." He said the pressures of being a public company created distractions and promoted short-term thinking that may not produce the best decisions in the long term.
Musk has also said on multiple occasions that Tesla would become profitable by the end of this year and would not need to raise additional funds, despite its increased cash-burn rate in recent quarters.
At the end of June, Tesla said it achieved its goal of making 5,000 Model 3s in one week. Musk previously said that the company would hit that number by the end of 2017 and that sustaining such a production rate was critical for Tesla to become profitable.
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