Three board members of electric carmaker Tesla are reportedly hiring attorneys to tackle potential impact from repeated claims issued by CEO Elon Musk on possible privatization of the struggling company.
Last week, the chief executive tweeted that he is considering taking Tesla private when the company’s shares hit $420. Shortly after that Tesla stock surged nearly 11 percent from $342 to $379 per share.
The step, which had been widely-covered by global media, was expected to evoke even more troubles for the electric vehicles manufacturer if it became clear that Musk intended to temporarily boost the company’s stock to force losses on short sellers. Such a measure could be considered stock manipulation, which is illegal.
Later, the head of the company tweeted that he was working with a wide range of companies, including buyout firm Silver Lake, investment bank Goldman Sachs and even the Saudi Arabian government to take Tesla private.
Musk’s tweeting has reportedly met strong disapproval among his fellow board members, who urged the eccentric CEO to curb his enthusiasm over a go-private deal and stop tweeting on the issue, New York Times reported on Tuesday, citing sources close to the matter.
The independent directors reportedly hired Paul, Weiss, Rifkind, Wharton & Garrison to aid in dealing with a Securities and Exchange Commission inquiry related to Musk’s posts. The board members are reportedly worried that the inquiry, which is at an early stage, may turn into a full-blown investigation which could have a significant negative impact on the company’s shares.
Three of those directors “have separately hired the law firm Latham & Watkins to advise them as they consider any proposal by Mr. Musk to take the company private,” the media outlet reported.
For more stories on economy & finance visit Eyes On Events's business section