SEC probes Tesla over Musk's tweet on taking company private

CEO and lead designer at SpaceX and co-founder of Tesla speaks at the International Space Station Research and Development Conference in Washington

CEO and lead designer at SpaceX and co-founder of Tesla speaks at the International Space Station Research and Development Conference in Washington

In a letter to shareholders after his tweet on Tuesday, Musk fleshed out his idea, suggesting they would get the option to sell their shares for $420 U.S. each or remain investors in a private Tesla, out of the glare of Wall Street and its need for quarterly results.

Gerber Kawasaki CEO Ross Gerber and FBN's Hillary Vaughn on how Tesla CEO Elon Musk tweeted that he may take the company private. The board said they ended up meeting several times to discuss the issue and are now "taking the appropriate next steps to evaluate" the proposal. "Funding secured", Musk tweeted Tuesday afternoon, initially offering little context.

However, he may not reap an instant reward in the event that Tesla goes private at $420 a share.

That's because Musk tweeted that the financing for the buyout had been locked up without equivocation.

Investors also seemed to be hesitant of the deal. The value of his shares at that price would total $72 billion, short of the $100 billion performance bar it must cross for him to be able to exercise his $2.6 billion stock-option grant, Bloomberg noted. His tweets didn't really explain why he wanted to do that, but a new email explains why.

"Am considering taking Tesla private at $420. Funding secured." - created what some attorneys are calling a potential battleground for lawsuits, regulator investigations and shareholder action. Funding secured." But later the same day, he said "a final decision has not yet been made, "in an e-mail to the company's employees". "He has done enough things that might warrant somebody taking a close look", Pitt said.

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They said the board also addressed the issue of how to fund such a deal, but gave no details.

There is no reference to Musk's Twitter account on the company's investor relations page under "investor communication", although Tesla's Twitter feed is included.

It's also unclear how Musk came up with the $420 price. Musk owns about 20 percent of the Palo Alto, California, company's stock, so that likely would reduce the cost of the buyout. "This is very haphazard and raises, in my view, serious questions about why he would choose to do things in exactly this way".

Follow Tesla's stock price in real-time here. The SEC declined to comment. The fund then reportedly proceeded to buy large amounts of Tesla stock on secondary markets, according to the Financial Times, and is now one of Tesla's eight biggest shareholders.

Nearly everything about the deal is outlandish, from Musk's out-of-the-blue disclosure in a nine-word tweet to the assertion that he has lined up adequate financing to a buy a company that seems to burn through cash faster than it produces cars.

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