Tesla chief Elon Musk unlikely to escape SEC scrutiny

28 August, 2018, 18:12 | Author: Sally Reid
  • Elon Musk

A federal judge in San Francisco dismissed a securities fraud lawsuit in which Tesla Inc (TSLA.O) shareholders accused the electric auto company and Chief Executive Elon Musk of misleading them about the progress of production of its Model 3 vehicle.

It is not clear exactly why Musk changed his mind about taking Tesla private, but the WSJ report suggested that he balked at the proposal of relinquishing further control of his company in order to secure the investment.

"I do not think the SEC wants to look irrelevant and they may look that way if they do nothing", Columbia Law School professor John Coffee told FOX Business on Monday. In a single tweet, Musk had people all over the world saying in dismay: Tesla is going private? How?

Founder and CEO of Tesla Motors Elon Musk speaks during a media tour of the Tesla Gigafactory, which will produce batteries for the electric carmaker, in Sparks, Nevada, U.S. July 26, 2016. Banks had at most just a couple of weeks to assess the situation, after being brought in to advise only after Musk's initial tweet, said the people, who asked not to be identified as the details aren't public.

"This is simply something that you don't lie about, this is not the way it's done", he said. Well, if you recall, the company's CEO Elon Musk has been stirring the Tesla pot lately.

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Production of the all-important Model 3 electric vehicle may have exceeded 6,000 units a week this month, according to Bloomberg's tracker.

In early August, before the buyout plan was made public, Tesla reiterated a forecast that it would achieve a profit in the third and fourth quarters, under normal accounting rules, and Musk said the company would not need to raise more cash.

In a blog post late Friday, Musk said most of Tesla's shareholders expressed the belief that the company was better off staying public.

This week would also be an inopportune time for a capital raising, given that many bankers and investors are away ahead of the September 3 Labour Day holiday.

One of Tesla's biggest challenges is ramping up production of its latest vehicle, the Model 3, which is critical to its profitability goals. Coffee noted that the SEC may feel as though these disclosures were deficient.

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