SEC Subpoenas Tesla Over ‘Funding Secured’ Settlement

Tesla said it has received a fresh subpoena from the US Securities and Exchange Commission (SEC) related to Twitter messages by Elon Musk in 2018 related to a plan to take the company private, and to Musk’s subsequent settlement of the affair with the SEC.

The company also raised its capital expenditure plans by $1 billion (£830m) as it seeks to boost output at new factories in Texas and Germany.

The electric carmaker in a quarterly filing late on Monday that it received the subpoena from the SEC on 13 June related to “our governance processes around compliance with the SEC settlement”.

The settlement, related to a Twitter post in which Musk said he had “funding secured” to take Tesla private, stripped Musk of his chairman’s role at Tesla while allowing him to continue as chief executive.

SEC supboena

Musk was also required to submit posts to Tesla’s lawyers for approval if they contain material information about the company.

The billionaire Tesla boss has been harshly critical of the SEC since then, and at the TED conference in April compared the experience to having someone point a gun at his child’s head.

He told the conference he agreed to the settlement only because if he fought the case Tesla’s banks would have cut off funding at a critical time.

“I was forced (to lie) to save Tesla’s life and that’s the only reason,” Musk said at the conference.

Multiple probes

Musk’s lawyers have sought to have a federal judge dismiss the settlement, arguing it attempts to “chill his exercise of First Amendment rights”.

The SEC is investigating Musk’s tweets about his effort to buy Twitter, including those about the deal being put on hold, according to a separate regulatory filing last Thursday.

The agency previously questioned Musk in an April letter about his apparent delay in disclosing a large stake he had acquired in Twitter.

Tesla said in November 2021 that the SEC had issued a subpoena related to an SEC probe of the 2018 settlement.

Crypto sale

In Monday’s filing Tesla said the value of its remaining Bitcoin and other digital asset holdings was worth $218m as of 30 June, down from $1.26bn at the end of last year.

Tesla said it took a charge of $170m from the loss of value of its cryptocurrency investments, as well as a $64m gain from holdings it sold at more than their original purchase price.

Last week Tesla said it had sold 75 percent of its Bitcoin holdings during the second quarter, which Musk said at an investor call was to maintain the company’s cash reserves due to costs from having its Shanghai plant shut down by Covid-19 lockdowns for most of the second quarter.

Capital expenses

Tesla said in the Monday filing it would spend from $6bn to $8bn on capital expenses such as equipment and construction this year and over the next two years, up $1bn from the range it previously said it planned to spend in those years.

The additional costs are largely related to starting up the Texas and Germany plants, which Musk previously described as “gigantic money furnaces” due to supply chain problems that had kept their initial output low.