Elon Musk's Tesla is now facing a criminal investigation
The US Department of Justice (DoJ) has initiated a criminal probe against electric car maker Tesla over public statements made by company CEO Elon Musk. The fraud investigations were initiated following Musk's tweet last month about taking Tesla private. Notably, the DoJ criminal investigation will run alongside the civil inquiry initiated by the US Securities and Exchange Commission (SEC). Here are the details.
What we know about the criminal probe against Tesla
Musk's tweet about his plans to take Tesla private, and his claim that funding had been secured sent Tesla's shares higher, prompting the DoJ to initiate a fraud investigation. Subsequently, Musk scrapped his privatization plan saying it was not feasible. Currently, as Bloomberg reports, the criminal inquiry is in its early stages and, like civil inquiries, might take months to conclude.
Tesla confirms that the DoJ contacted it
"Last month, following Elon's announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DoJ and has been cooperative in responding to it," said Tesla, confirming that it had been contacted by the DoJ.
Meanwhile, the SEC is probing Musk's tweet and Tesla's pronouncements
Following Musk's privatization tweet, the SEC had also issued a subpoena to Tesla to probe whether Musk's tweet was meant to be factual or meant to mislead investors. The subpoena came on the back of ongoing SEC investigations on whether the electric car maker had made misleading public pronouncements regarding its manufacturing goals and sales targets, according to Bloomberg.
DoJ might also investigate other public statements made by Musk
Considering that the Department of Justice has now turned its attention to Musk's tweet, it might only be a matter of time before investigators extend their scrutiny to other public statements made by the South Africa-born entrepreneur about Tesla's health. Authorities could also start investigating the resignation of Tesla's Chief Accounting Officer (CFO) Dave Morton, who resigned less than a month after joining.
