Sonam Rai of Reuters had the news:
The Justice Department asked Tesla for documents about Musk’s announcement, Tesla said, describing it as a “voluntary request.” The company said it was co-operating and that the matter “should be quickly resolved.”
The probe by the Justice Department, which can press criminal charges, comes on top of a civil probe by the Securities and Exchange Commission and shareholder lawsuits.
The Justice Department declined to comment. Bloomberg reported earlier that federal prosecutors had opened a criminal fraud investigation. Tesla did not say whether the Justice Department probe was criminal or civil.
Musk surprised investors on Aug. 7 with his plan to take Tesla private, tweeting that he had “funding secured” for a deal that would have valued the company at $72 billion. In a separate tweet, he wrote: “Investor support is confirmed.”
Drew Harwell, Devlin Barrett and Matt Zapotosky of The Washington Post reported that the company also faces an SEC investigation:
The electric-car maker and its billionaire chief are also facing a Securities and Exchange Commission investigation and multiple shareholder lawsuits over the announcement from Musk, who tweeted that he had “funding secured” to complete the deal to take the company private.
The surprise announcement on Aug. 7 sent Tesla’s stock price soaring by nearly 11 percent, cementing its place as one of the most valuable U.S. car companies. But 17 days later, amid growing skepticism from shareholders and analysts, Musk announced the proposal was dead.
Tesla investors are arguing in several pending lawsuits that the move, in which Musk pledged to buy back outstanding shares from investors at an elevated price, amounted to market manipulation or fraud.
Tesla’s stock dropped more than 4 percent Tuesday after the news, which Bloomberg first reported. Its stock is now trading 25 percent lower than it was on the day of Musk’s tweet.
Nathan Bomey of USA Today reported that Tesla could face major sanctions:
But later in August, Musk abandoned the bid, saying his financial advisers had decided it wasn’t a worthwhile effort and would have unintended consequences. Tesla will stay public.
Bloomberg said the investigation centers on the possibility of “fraud.” Federal authorities can crack down on companies or investors who intentionally mislead investors.
Companies convicted of fraud can face sanctions, including major financial penalties, while individuals can face fines, restrictions on their future business activity and prison time.
The criminal probe compounds Tesla’s troubles during a crucial period as it seeks to ramp up production of its Model 3 electric car.
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