Articles Tagged with #Tesla

The Complaint alleges that  Musk met for less than an hour with three representatives of Public Investment Fund, at Tesla’s Fremont, California, plant on July 31 during which the lead representative for the Saudi Arabian sovereign wealth fund expressed interest in taking Tesla private if the terms were “reasonable.”

On Aug. 24, Musk stated that Tesla would remain public, citing investor resistance.

Some legal authorities are commenting that Elon Musks public mention of taking Tesla private may have violated Securities and Exchange Commission Rule 14e-8. This prohibits publicly traded companies from announcing plans to buy or sell securities if executives don’t intend to follow through within a reasonable time.  The purpose of the rule is to prevent manipulation of the  stock price. Musk tweeted “Am considering taking Tesla private at $420. Funding secured.”  This tweet resulted in a stock price spike of Tesla to $387.49 closing price. At $420 per share, this would mean Tesla would need to come up with $71 billion to take the company private. I don’t think there is a violation despite the unusual nature of Musks tweet.

Here is the language of the regulation at issue

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