Tesla gets subpoena over Musk's tweet to take company private

Federal regulators have subpoenaed each of Tesla's directors following preliminary inquiries into CEO Elon Musk’s tweet last week assuring investors that he had secured the funding needed to take the company private.

However, the report from the Wall Street Journal, which cited a person familiar with the matter, said it was unknown what information was being sought by the Securities and Exchange Commission.

The start of the formal investigation was an indication that the watchdog suspected that Tesla had breached the law by giving shareholders misleading information about meaningful company events . The formal investigation could take months or even years to conclude.

Musk wrote on 7 August that he was considering taking the carmaker private at $420 a share and that he had secured the necessary funding, without providing details. He followed that up on 13 August explaining that he had negotiated the funding with Saudi Arabia's sovereign-wealth fund but said it had not been signed-off.

It was alleged that Musk had used Twitter repeatedly to criticise investors who were betting against his company, sometimes making risky statements and offering positive outlooks that might boost the stock and hurt short-sellers.

Former SEC chairman Harvey Pitt said that Mr Musk's tweets could land him in trouble: "If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, and it could also be securities fraud,” Mr Pitt told CNBC.

"The use of a specific price for a potential going-private transaction is highly unprecedented, and therefore raises significant questions about what his intent was. So that would have to be investigated."

Tesla shares were down almost 1% on Thursday.