Tesla said Friday in a regulatory filing that the U.S. Securities and Exchange Commission and Department of Justice are investigating projections made last year about Model 3 production rates. The SEC has issued subpoenas for information related to Model 3 production estimates. The DOJ, which is running a separate investigation over Model 3 production targets, has stopped short of taking that action.
The information contained in Tesla’s 10Q filing backs up an October 26 article by The Wall Street Journal that reported the FBI was investigating whether the company misstated information about Model 3 production and misled investors. The FBI is the investigating arm of the DOJ.
Tesla issued a statement at the time of the article, acknowledging that it had received a voluntary request for documents from the Department of Justice about its public guidance for the Model 3 ramp. “We were cooperative in responding to it,” the statement issued last week said. “We have not received a subpoena, a request for testimony, or any other formal process, and there have been no additional document requests about this from the Department of Justice for months.”
This latest filing provides further confirmation and clarifies the extent of the investigations. It’s also the first time Tesla has said that the SEC has issued subpoenas to the company for information about the Model 3 production.
Here’s the whole nugget in the SEC filing:
We receive requests for information from regulators and governmental authorities, such as the National Highway Traffic Safety Administration, the National Transportation Safety Board, the SEC, the Department of Justice (“DOJ”) and various state agencies. We routinely cooperate with such regulatory and governmental requests.
In particular, the SEC has issued subpoenas to Tesla in connection with (a) Mr. Musk’s prior statement that he was considering taking Tesla private and (b) certain projections that we made for Model 3 production rates during 2017 and other public statements relating to Model 3 production. The DOJ has also asked us to voluntarily provide it with information about each of these matters and is investigating. Aside from the settlement with the SEC relating to Mr. Musk’s statement that he was considering taking Tesla private, there have not been any developments in these matters that we deem to be material, and to our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred. As is our normal practice, we have been cooperating and will continue to cooperate with government authorities. We cannot predict the outcome or impact of any ongoing matters. Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, and financial position.
We are also subject to various other legal proceedings and claims that arise from the normal course of business activities. If an unfavorable ruling or development were to occur, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position and brand.
This didn’t stop CEO Elon Musk from blasting the WSJ for the report during a lengthy podcast interview released Friday with Recode’s Kara Swisher.
“The amount of untruthful stuff that is written is unbelievable. Take that Wall Street Journal front-page article about, like, ‘The FBI is closing in.’ That is utterly false. That’s absurd. To print such a falsehood on the front page of a major newspaper is outrageous. Like, why are they even journalists? They’re terrible. Terrible people.”
Tesla recently reached a settlement with the SEC, which began with a now infamous “funding secured” tweet by Musk about taking the electric automaker private. A federal judge approved October 16 Musk’s settlement with the SEC over securities fraud allegations. The SEC alleged in a complaint filed in September that Musk lied when he tweeted on August 7 that he had “funding secured” for a private takeover of the company at $420 per share.
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