- Shares drop 7% on news DoJ has begun criminal inquiry
- Musk tweeted ‘funding secured’ over take-private plan
More bad news is piling up for Elon Musk, the billionaire founder of the electronic car company Tesla. Tesla is now under investigation by the US justice department over statements the company and Musk made last month.
Bloomberg first reported the DoJ has opened a criminal inquiry into statements Musk made about plans to take the troubled car company private. Tesla’s shares dropped over 7% on the news, which was confirmed by the company, before recovering to close 3.35% down.
Tesla’s value has fallen by almost a third since his initial tweets, wiping nearly $18bn off the value of the company.
The investigation comes on top of a civil investigation by the Securities and Exchange Commission and lawsuits from investors.
Tesla said in a statement: “Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DoJ and has been cooperative in responding to it.
“We have not received a subpoena, a request for testimony, or any other formal process. We respect the DoJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”
Last month Musk tweeted he was contemplating taking Tesla private and had “funding secured” for the deal. The tweet sent Tesla’s share price soaring, but the price collapsed after it emerged that funding had not been secured.
Earlier this month Musk abandoned plans to take Tesla private after shareholders had persuaded him against the idea.
“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was, ‘Please don’t do this’,” Musk wrote in the blogpost.
The latests legal issues come as investors have become increasingly concerned about Musk’s behaviour. The Tesla boss is being sued by British diver Vernon Unsworth after Musk falsely accused Unsworth of being a “pedo”. Unsworth helped rescue the young football players trapped in a Thai cave and had criticized Musk’s plans to send a miniature submarine to help the rescue effort.
Tesla’s shares took another tumble in early September when Musk smoked marijuana on a live web show and two senior executives announced they were leaving.