SEC Probes Tesla CEO Musk’s Tweets

WASHINGTON—U.S. regulators are asking Tesla Inc. TSLA -3.76%whether Chief Executive Elon Musk was truthful when he tweeted that he had secured funding for what would be the largest-ever corporate buyout, people familiar with the matter said.

Officials at the Securities and Exchange Commission want to know whether Mr. Musk had a factual basis for tweeting Tuesday that the going-private transaction was all but certain, with only a shareholder vote needed to pull it off, the people said. 

The SEC’s inquiries, which originated from the agency’s San Francisco office, suggest Tesla could come under an enforcement investigation if regulators suspect that Mr. Musk’s statement was misleading or false.

It couldn’t be learned on Wednesday whether the agency had opened a formal enforcement investigation. An SEC spokesman declined to comment. Tesla didn’t respond to a request for comment.

Under U.S. law, companies and corporate officers can’t give shareholders misleading information about meaningful company events. Mr. Musk also could be in trouble if regulators develop evidence that he made a statement aimed at goosing his company’s share price.

Mr. Musk shocked Wall Street by tweeting Tuesday that he planned to take the electric-car maker private at $420 a share, or $72 billion. That is about 20% above the stock’s trading price earlier that day and 11% higher than its Tuesday closing price. In his tweet Tuesday afternoon, Mr. Musk wrote that the buyout had “funding secured,” but he didn’t provide any details. 

Thomas Farley, a former president of the New York Stock Exchange, said it would be relatively straightforward for regulators to fact-check some of Mr. Musk’s statements. Mr. Farley said regulators could ask to see any legal agreements that Tesla has with financial partners or backers on the going-private deal.

“If funding is certain, there is documentation to demonstrate that,” Mr. Farley said. “This is a very easy one to manage, and they should manage it.”

The probe by the SEC adds to a swirl of news around the electric-car maker this week. A group of Tesla board members said Wednesday Mr. Musk spoke to them last week about taking the company private.

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