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Money Tesla likely to face SEC investigation following Musk tweets amid debate of market manipulation

10:26  09 august  2018
10:26  09 august  2018 Source:   cnbc.com

Tesla CEO Musk taunts short sellers amid legal scrutiny

  Tesla CEO Musk taunts short sellers amid legal scrutiny Tesla CEO Musk taunts short sellers amid legal scrutinyThe tweets are aimed at "shorts," or investors who borrowed shares of Tesla and immediately sold them with the hope that Tesla's share price would fall. That would allow the shorts to buy back the stock at a lower price, return the shares to the lender, and pocket the difference.

Tesla CEO Elon Musk 's tweets about securing funding to take the company private will likely prompt an investigation by federal securities regulators. The Wall Street Journal reported that the Securities and Exchange Commission has already "made inquiries."

Musk tweet sparks debate on Tesla leadership. Tesla likely to face SEC investigation following Musk tweets amid debate of market manipulation . Elon Musk wants to take Tesla private at billion — here’s what that means.

Elon Musk's lawyers are probably pouring over rule 14e-8 of the Securities Exchange Act of 1934 right about now.

That regulation is the one the Tesla CEO may or may not have violated when he sent the markets into a frenzy and halted trading of Tesla's shares after nonchalantly tweeting Tuesday that he was thinking about taking the electric car company private and had "funding secured," securities lawyers say.

Whether it was an impulse tweet or not, it's likely that the Securities and Exchange Commission has already opened an investigation and is looking for documentation to back up Musk's comments, former SEC enforcement lawyers say.

Elon Musk sued over tweets, proposal to take Tesla private

  Elon Musk sued over tweets, proposal to take Tesla private Tesla Inc. and its chief executive Elon Musk were sued twice on Friday by investors who said they fraudulently engineered a scheme to squeeze short-sellers, including through Musk's proposal to take the electric car company private. The lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion US transaction that valued the company at $420 per share, and that "funding" had been "secured.

Markets Insider. With Musk 's tweet , Tesla was plunged into unprecedented market territory. Sichenzia says there could very well be an SEC investigation into the veracity of Musk 's market -moving tweet .

About an hour and a half after Musk ’s first tweet , trading on Tesla halted amid concerns of securities fraud. The tweet could be seen as a bid to manipulate the market , former SEC Chairman Harvey Pitt told CNBC.

The Wall Street Journal reported Wednesday that the SEC has, in fact, "made inquiries" to find out whether his claim was true, citing people familiar with the matter.

"I can't imagine that the enforcement division hasn't opened a file, that they are not calling his counsel or him and saying 'we would like whatever papers you have about this, if you have written anything down, if you have talked to lenders, if you have materials about that we would like to see them,'" said Tom Gorman, a former senior enforcement attorney with the SEC and a partner at Dorsey and Whitney in Washington, D.C. "'And right after we have finished seeing all that stuff, we would like to talk to you.'"

Investors aren't so convinced that Musk has actually secured funding. If not, that would spell big trouble for both Musk and his company.

Tesla tanks after Musk's off-kilter interview with the NYT

  Tesla tanks after Musk's off-kilter interview with the NYT Shares of Tesla took a hit in early trading Friday after reports that CEO Elon Musk will meet with Securities and Exchange Commission officials next week.The stock posted its worst day since March 27, when it fell 8.22 percent.

Mr. Musk ’s “ tweets seem cryptic at best, and it is hard to see how he has complied with his duty to not be misleadingly incomplete.” (By the end of the day, Tesla shares had shot up over 10 percent.) In 2013, the Securities and Exchange Commission ruled, in a case involving the Netflix founder Reed

Tesla suspends share-trading after Elon Musk tweets he wants to take the carmaker private. The SEC declined to comment on whether it was investigating Musk ’s disclosure. Trading in the company’s shares was halted for 92 minutes Tuesday afternoon — an eternity in stock- market terms

"There is skepticism as to where this money comes from. It doesn't make sense," Efraim Levy, an analyst at CFRA, told CNBC. "The reason it is trading at a discount is because of uncertainty as to whether the deal will come to fruition. If it doesn't come through, the stock is going to crater."

The SEC's rule 14e-8 basically prohibits publicly traded companies from announcing plans to buy or sell securities if executives don't intend to follow through, don't have the means to complete the deal or are flat out trying to manipulate the stock price.

§ 240.14e-8 Prohibited conduct in connection with pre-commencement communications.

It is a fraudulent, deceptive or manipulative act or practice within the meaning of section 14(e) of the Act ( 15 U.S.C. 78n) for any person to publicly announce that the person (or a party on whose behalf the person is acting) plans to make a tender offer that has not yet been commenced, if the person:

Lawsuits accuse Tesla's Musk of fraud over tweets, going-private proposal

  Lawsuits accuse Tesla's Musk of fraud over tweets, going-private proposal Lawsuits accuse Tesla's Musk of fraud over tweets, going-private proposalThe lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion transaction that valued the company at $420 per share, and that "funding" had been "secured.

The SEC did not immediately respond to a request for comment on Musk ’s tweet . Trump supporter calling for end to Mueller investigation face -plants after reporter points out her Benghazi shirt. Elon Musk considers taking Tesla private.

Now, with Musk ’s latest tweet , he has opened himself up to potential liability in the form of a potential SEC investigation or lawsuits. “If this is not a serious bid, the short sellers can sue on the grounds that this is an artificial and fraudulent manipulation of the stock, which violates Rule 10b-5,” John

(a) Is making the announcement of a potential tender offer without the intention to commence the offer within a reasonable time and complete the offer;

(b) Intends, directly or indirectly, for the announcement to manipulate the market price of the stock of the bidder or subject company; or

(c) Does not have the reasonable belief that the person will have the means to purchase securities to complete the offer.

"He is claiming there is a specific source of the funding so that had better be true. He has also claimed there is a specific amount available for funding. That has to be true. Otherwise, even if it's not manipulation it would be fraud so he's got two potential areas of difficulty right there," former SEC Chairman Harvey Pitt told CNBC.

Tesla still hasn't said where it's getting the more than $71 billion it would cost to take the company private. Wall Street bankers also don't know, suggesting Musk has secured financing elsewhere. But that seems implausible given the size of the deal, which would require multiple banks, and cult-like interest in Tesla, dealmakers and analysts say.

"News of the deal would have leaked had Tesla already held discussions to secure funding," UBS analyst Colin Langan wrote in a research note Tuesday.

Jim Cramer says Elon Musk should take medical leave from Tesla .
CNBC host Jim Cramer says TeslaCEO Elon Musk should take a medical leave. Cramer's comes after Tesla shares tumbled on Friday in the wake of Musk's interview with the New York Times.Load Error

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