Tesla Stock Drops; Elon Musk Under Probation By DOJ

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Tesla Inc. shares relinquished earlier gains and fell more than 5% on Tuesday after a report said the Silicon Valley car maker was under criminal investigation for Chief Executive Elon Musk’s going-private tweet.

Federal prosecutors have opened a fraud investigation to look into Musk’s statements on Twitter, Bloomberg News reported, citing two people familiar with the matter. Tesla did not immediately comment and a Justice Department spokesperson declined to comment, the report said.
In a statement to several news organizations, Tesla said that the company last month received a “voluntary request” for documents from the Justice Department and it has been “cooperative in responding to it.”
Tesla has not received a subpoena, a request for testimony, or any formal process, it said. “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,” the company said.
Musk tweets taking Tesla private.
Reports of investigations “will be an overhang on the stock until more information is released,” analysts at Baird said in a note. Musk will likely be liable for fines, but not necessarily Tesla, although details are unclear, they said.
Musk on Aug. 7 tweeted that he was “considering” taking Tesla TSLA, -0.26%  private, followed by the phrase “funding secured.”
The tweet surprised Tesla’s other board members and created volatility in the stock with many investors and analysts questioning whether that phrase was accurate. The Securities and Exchange Commission is reported to be investigating whether funding had indeed been secured. Musk said on Aug. 24 he was keeping Tesla public.
Since then, the chief executive has been embroiled in more controversy, including appearing to smoke a joint during a filmed interview and being sued for defamation by a cave explorer involved in the rescue of a Thai youth soccer team.
Musk gets high, Tesla stock steeps low.
Tesla shares on Tuesday closed 3.4% off at $284.96. The shares had been rangebound in recent sessions, and are off 8% this year. That contrasts with gains of 9% and 6% for the S&P 500 index SPX,  and the Dow Jones Industrial Average DJIA.
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