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Tesla shares slip after company decides to stay public

28 August, 2018, 18:10 | Author: Shawna Walton
  • Elon Musk Abandons Plan to Take Tesla Private Two Weeks After Bombshell TweetMore

Tesla Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014.

According to sources, O'Brien's decision to leave Tesla predates the company's recent back-and-forth about taking the company private, a decision which was ultimately scrapped when CEO Elon Musk determined that it was better to focus on ramping up production for the company's newest mass-production electric sedan, the Model 3.

Notes from Wall Street analysts questioned Musk's credibility going forward in the face of a possible investigation by the U.S. Securities and Exchange Commission into the factual accuracy of an August 7 tweet that funding for the buyout deal was "secured".

The SEC declined to confirm that report to Reuters. A Tesla spokesman on Sunday referred to those previous comments.

"The SEC will continue its investigation until it's satisfied that it is on top of the facts", said Stephen Crimmins, an attorney with Murphy & McGonigle who spent 14 years at the SEC, where he prosecuted hundreds of securities cases. Then Musk aborted his own mission, when hastily assembled bankers and advisers had barely started work, according to people familiar with the matter. And if Musk's tweets were to be believed, it was basically a done deal.

But acting in good faith may not be enough to help Musk escape the regulator's gaze.

"Additionally, a number of institutional shareholders have explained that they have internal compliance issues that limit how much they can invest in a private company".

It remains unclear what Musk meant by "funding secured".

The Saudi fund had earlier acquired a just-below 5 per cent stake in Tesla on the open market.

Tesla's board published a parallel letter saying they supported Musk in his decision to keep the company public.

Shares of Tesla slipped on the first day of trading after the electric vehicle maker said it won't consider going private after all.

"Eventually this will blow over, but it's going to take at least six months", analyst Gene Munster of Loup Ventures said by phone Saturday. While advisers "were confident" a deal could be reached, Musk told some board members Thursday before a meeting "he had doubts about the proposal".

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