Tesla chief Elon Musk unlikely to escape SEC scrutiny

The regulatory concerns may not be over for Tesla chief executive Elon Musk, despite announcing over the weekend that he no longer intends to take his company private.

Amid a number of issues raised after Musk tweeted earlier this month that he was considering taking the company private at a buyout price of $420, the Securities and Exchange Commission (SEC) ramped up its investigation into the company, and it’s likely to continue.

“I do not think the SEC wants to look irrelevant and they may look that way if they do nothing,” Columbia Law School professor John Coffee told FOX Business on Monday.

At the time, Musk said funding had been secured, though he later revealed in a blog post that there was no concrete deal in place and, in fact, he was still open to talking with other investors.

There are also concerns Musk made the announcement to give Tesla’s stock price a boost. After the initial tweet, shares of Tesla soared.

David Johnson, a managing partner at corporate restructuring firm Abraxas Group, told FOX Business that Musk had made a misstep firing the tweet off.

“This is simply something that you don’t lie about, this is not the way it’s done,” he said. “Public companies need more details about these things and you can’t make them up.”

However, even a formal SEC investigation does not necessarily indicate a case will follow.

Tesla was already under investigation regarding its disclosure of production issues pertaining to its Model 3 vehicle, according to The Wall Street Journal. Coffee noted that the SEC may feel as though these disclosures were deficient.

In a blog post late Friday, Musk said most of Tesla’s shareholders expressed the belief that the company was better off staying public. Many institutional investors would have had their investments restricted, while retail investors would have been left out, he added.

Musk also indicated he was unaware how challenging the process would be and did not want to distract from the goal of ramping up production of the Model 3 sedan.

Abandoning the plans, however, does not eliminate the concerns that led the SEC to launch a formal investigation into the company in the first place.

Shares of Tesla were trading lower in Monday’s session.

Earlier this month, Musk admitted during an interview with The New York Times that this year has been the most painful of his career, as he detailed the intense personal challenges he is grappling with at the helm of the company.