SEC investigates Tesla for possible securities law breach: WSJ - Metro US

SEC investigates Tesla for possible securities law breach: WSJ

The Tesla Model S version 7.0 software update containing Autopilot features is demonstrated during a Tesla event in Palo Alto, California, U.S., October 14, 2015. REUTERS/Beck Diefenbach/File Photo
By Joseph White

By Joseph White

(Reuters) – The Securities and Exchange Commission is investigating whether Tesla Motors Inc waited too long to disclose a fatal crash in May that called into question the safety of a system that takes control of the car’s steering and braking, the Wall Street Journal reported on Monday, citing sources.

Tesla said in a statement on Monday afternoon that it “has not received any communication from the SEC regarding this issue.” The SEC declined to comment.

Tesla shares sank in after hours trading, after rising 3.7 percent during the regular trading day following a tweet by Chief Executive Elon Musk on Sunday that he is working on a “Top Secret Masterplan, Part 2” for the electric car company.

Musk, hinting at a possible new vision for the company, stated in the tweet that he hoped to “publish later this week.”

The SEC is scrutinizing whether Tesla should have disclosed the fatal accident involving a Model S sedan operating in Autopilot mode as a “material” event, or a development a reasonable investor would consider important, the Wall Street Journal said. (http://on.wsj.com/29Icppr)

The National Highway Traffic Safety Administration (NHTSA) has already said that it was investigating the May 7 accident in Florida that killed 40-year-old Joshua Brown.

The timing of Tesla’s disclosures about the accident has become an issue for the company in part because Autopilot is a signature of its image as a pioneer in automotive technology. No other automaker has released to the public a system that allows drivers to take their hands off the wheel for an extended period while a car is in motion.

Musk last week used his Twitter account to mount a defense of Tesla’s decision not to disclose the accident until June 30, when NHTSA said it was launching its investigation.

NHTSA last week said it was also looking into the July 1 crash in Pennsylvania of a Tesla Model X to determine whether Autopilot functions were engaged at the time of the accident.

Separately, lawyers for the family of Joshua Brown said they are investigating the circumstances of the crash, and awaiting conclusions from police and federal agencies. Paul Grieco, one of the lawyers for the Brown family, told Reuters his firm has received calls from other Tesla owners involved in accidents, some involving autopilot and others not.

The investigations related to the Autopilot system come at a time when Musk and his high-flying company are under pressure on several fronts.

In May, Tesla sold $1.46 billion worth of shares, in part to fund Musk’s plan to accelerate development of a new, lower priced electric car called the Model 3. Then, in June, Musk disclosed a plan for Tesla to buy residential solar panel installation firm SolarCity Corp for $2.8 billion in Tesla stock.

That plan has drawn criticism from some investors critical of Musk’s role as both chairman and largest shareholder of SolarCity and CEO of Tesla.At the same time, Tesla is continuing to struggle to meet its targets for building and delivering its Model S sedans and Model X sport utilities. The company reported during the long July 4 holiday weekend that it had delivered 14,370 vehicles during the second quarter, short of its target of 17,000 vehicles.

(Reporting by Arunima Banerjee in Bengaluru and David Shepardson in Washington; Editing by Anil D’Silva and Tom Brown)

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