Report: Tesla May Be Facing U.S. Criminal Probe Over Elon Musk ‘Going Private’ Tweets

Shaun Williams

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Bloomberg yesterday dropped a bombshell: Tesla is said to be under investigation for fraud after CEO Elon Musk tweeted out that he was considering taking the company public with secured funding.

The information comes from a few sources who are said to be "familiar with the matter". Tesla has publicly admitted that it is voluntarily working alongside the Justice Department to hand over documents and data that is being requested by the government.

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Once the fraud investigation news broke Tesla (NASDAQ:TSLA) immediately plummeted by nearly 7 percent. Prices have rallied today as the stock recovers. TSLA is up about 4 percent today which has helped put a dent in yesterday's loss.

The company denies that any subpoenas have been issued and that everything right now is purely at-will cooperation, but given the confirmation that the Justice Department has been probing the company for information suggests that Bloomberg may have it right. Tesla's statement in part:

“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. We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”

And it may not even be surprising if there is indeed a criminal investigation currently underway. Tesla stock unsurprisingly spiked 11 percent the day of Elon's now infamous tweet, or roughly a gain of $6 billion in market valuation. Countless bullish investors made a killing that day while countless more bears, whether short sellers or CALL-writers/PUT-buyers were gutted. Elon began doing damage control by claiming that Saudi's Public Investment Fund had "almost" helped him move forward with taking Tesla private. This indicated that the company was nowhere near as close to a real-life move to take Tesla private as Elon strongly hinted at with his statements.

Now that a criminal probe is underway, investigators will have access to a whole host of Tesla information that was previously unavailable and some analysts are afraid that this will open 'pandora's box' ie prosecutors may wind up with evidence of other misdeeds in the course of the investigation. We will continue to monitor this situation closely.


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