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SEC Sends Subpoena To Tesla In Probe Over Musk's Take-Private Tweets (bloomberg.com)
The U.S. Securities and Exchange Commission sent Tesla a subpoena regarding Elon Musk's effort to take the company private, "indicating the regulatory scrutiny of his statements have reached a more serious stage," reports Bloomberg. Last week, Musk tweeted he was considering taking Tesla off the market and had "funding secured" for the deal. From the report: Musk exposed himself to legal risk by tweeting Aug. 7 that he had the funding for a buyout. Almost a week later, the chief executive officer said the basis for his statement was conversations with Saudi Arabia's Public Investment Fund, which first expressed interest in helping take the company private in early 2017. Tesla's board has since clarified that it hasn't received a formal proposal from Musk, who's also chairman, nor has it concluded whether going private would be advisable or feasible. Tesla may face potential regulatory challenges beyond the SEC investigation. The company probably will need approval of U.S. national security officials if Saudi Arabia finances the effort to take the company private, and President Donald Trump's administration has been stepping up scrutiny of foreign investment in American technology.
Bloomberg ran an article titled Elon Musk's Funding for Tesla Wasn't So Secure where they pointed out when Musk said "funding is secured" there was no actual agreement in place. His statement being factually untrue risked causing this SEC investigation.
Couple things:
The SEC has their own subpoena powers. No judge necessary. Companies agree to comply as part of the process of going public.
The SEC only has civil jurisdiction, not criminal. The only thing the SEC can do is levy fines and bar company officers from being officers. The DOJ (FBI) will have to get involved for indictments to happen.
Here.
Key points:
* This had been discussed with the board before the announcement
* The board agreed that the next step was to discuss with large shareholders.
* It would be unfair for the big shareholders to know of this proposal but not the small shareholders, hence a public announcement. (It isn't clear to me whether the board specifically agreed to this announcement, or whether Musk felt it was a logical consequence of the previous point.)
* "Funding secured" means the Saudi Arabian sovereign wealth fund has been eager to do this for quite some time, although Musk would like there to be other investors too.
I feel somewhat but not completely reassured by this explanation.
Quattuor res in hoc mundo sanctae sunt: libri, liberi, libertas et liberalitas.
A subpoena is one step below a warrant, and one does not generally have to convince a judge of anything to obtain one. They are often issued by the clerk of the court, or even by the lawyers themselves. Or, as in this case, it was directly issued by a federal agency.
If one is served a subpoena that they believe is invalid, they must file a formal objection with the court. Simply ignoring a subpoena, even an improper one, is grounds for penalty.
A warrant, in contrast, is an authorization by a judge or other "competent official" for an officer to perform an act that would otherwise be illegal, most frequently to arrest someone or to perform a search, but is also used for executions and myriad other things.