On Tuesday, Elon Musk announced that he was making moves to take Tesla private, with this tweet that made stocks for the company shoot upwards:
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Am considering taking Tesla private at $420. Funding secured.</p>— Elon Musk (@elonmusk) <a href="https://twitter.com/elonmusk/status/1026872652290379776?ref_src=twsrc%5Etfw">August 7, 2018</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Later that day, Tesla publicly put out an email that Musk had sent to his employees,which had alerted them to this move. Meanwhile, legal questions have been raised about the way Musk went about this takeover bid and whether it may have violated the rules of the Securities and Exchange Commission (SEC).
In 2013, the SEC rules that companies are allowed to announce big news through social media with forewarning to their investors and announcement to the larger public.
But is Twitter the place to announce a $72 billion deal? Could Musk’s statement be considered fraudulent or misleading? That may be contingent on further information – where the funding is coming from and exactly how much of it is “secured.”
We discuss with Columbia law professor John Coffee.
John Coffee, professor of law at Columbia Law School where he specializes in corporate law, securities fraud and white collar crime