Tesla CEO Elon Musk (Photo: Justin Chin/Bloomberg)
U.S. regulators are likely to focus on whether Elon Musk was telling the truth when he said on Twitter that he'd secured funding to take electric-carmaker Tesla Inc. private in what could be the biggest buyout in history.
The Securities and Exchange Commission is questioning the company whether the chief executive officer's tweets were statements of fact and why he chose to make the disclosure using social media instead of through a filing, the Wall Street Journal said Wednesday, citing unidentified people familiar with the matter.
The SEC has established that companies can use social media to announce material and potentially market-moving information. But securities lawyers warned that Musk could find himself in legal difficulty if the "funding secured" portion of his statement posted on Tuesday was untrue or half-baked.
"To put that out unless he absolutely has financing secured and is ready to make the bid that could be market manipulation," said Keith Higgins, a Ropes & Gray partner who formerly led the SEC's corporation finance unit. "He could be in big trouble if that turns out not to have been true."
Judith Burns, an SEC spokeswoman, declined to comment. Tesla also declined to comment.
