Electric car-maker Tesla ‘s journey to the roads is undergoing serious turbulence as the company has been hit by a string of problems from – car crashes, to manufacturing hurdles and now a criminal investigation.
Tesla is under criminal investigation by the U.S. Department of Justice over comments made by the company’s CEO Elon Musk, according to a Bloomberg report on Tuesday.
The company is reportedly being investigated for fraud after Musk shook the market last month when he announced on Twitter that he was considering taking the company private. He had also claimed that funding had already been “secured.” He offered no concrete details on a proposed strategy, but specified a buyout price of $420 per share.
That sent shares soaring and raised concerns Musk made the announcement to give Tesla’s stock price a boost. But he later revealed that there was no concrete funding deal in place, and eventually announced he had decided it would be better for Tesla to remain a public company.
Earlier this month Musk abandoned plans to take Tesla private after shareholders had persuaded him against the idea. “Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was, ‘Please don’t do this’,” Musk wrote in the blogpost.
Tesla’s shares dropped over 7% on the news, which was confirmed by the company, before recovering to close 3.35% down. Tesla’s value has fallen by almost a third since his initial tweets, wiping nearly $18 billion off the value of the company.
The investigation comes on top of a civil investigation by the U.S. Securities and Exchange Commission and lawsuits from investors.
The latest legal issues come as investors have become increasingly concerned about Musk’s behaviour. Musk had smoked marijuana on a live web show which led to two senior executives to announce they were leaving the company.