SEC Investigates Tesla for Possible Securities Law Breach

The Securities and Exchange Commission is investigating whether Tesla Motors Inc. waited too much time to reveal a fatal crash in-may that called into question the safety of something in the automobile that takes control of steering and braking, the Wall Street Journal reported on Monday, citing an unnamed source.

Tesla said in a statement on Monday afternoon that it "hasn’t received any communication from the SEC regarding this problem." The SEC declined to comment.

Tesla shares fell 1.3 percent in after-hours trading following a publication of the report on the Journal’s website.

The stock had risen 3.7 percent during regular trading, carrying out a tweet on Sunday by LEADER Elon Musk that he’s focusing on a "” INSIDE INFO ” Masterplan, Part 2" for the electric car company.

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

In its report on Monday, the Journal said the SEC is scrutinizing whether Tesla must have disclosed the fatal accident involving a Model S sedan operating in Autopilot mode as a “material” event, or a development an acceptable investor would consider important.

It really is unclear what action, if any, the SEC will need. Automakers usually do not customarily report fatal auto accidents involving their vehicles as material events to shareholders. There is absolutely no established practice yet for reporting accidents where emerging auto-driving technology could be one factor.

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

NHTSA is sending a five-person team to Florida later this week to research that crash, said Christopher O’Neil, a spokesman for the agency, making recommendations to regulators and companies about transportation-related safety issues.

The timing of Tesla’s disclosures about the accident is becoming an issue for the business partly because Autopilot is paramount to its image as a pioneer in automotive technology. No other automaker has released to the general public a system when a person can drive with hands off the wheel for a long period while an automobile is in motion.

Tesla has said Autopilot ought to be used as a backup rather than as an alternative for the driver, who should keep practical the wheel continuously, and it has cautioned that the machine is in beta, or test, mode.

Musk the other day used his Twitter account to mount a defense of Tesla’s decision never to disclose the accident to the general public until June 30, when NHTSA said it had been launching its investigation.

Tesla said it alerted NHTSA on, may 16, nine days following the accident, since it conducted its internal probe in to the crash.

NHTSA said the other day that it had been also looking at a July 1 crash in Pennsylvania of a Tesla Model X sport utility vehicle to determine whether Autopilot functions were engaged during the accident.

Tesla also said on Monday that it had been looking at a crash in Montana. For the reason that crash, according to a written report on Electrek, a clean technology transport news website, a Model X driver said Autopilot was engaged when the automobile slammed right into a guardrail. Tesla didn’t provide any more details.

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

The probes linked to Autopilot come at the same time when Musk and his high-flying company face pressure on several fronts.

IN-MAY, Tesla sold $2 billion worth of shares, partly to fund Musk’s intend to accelerate development of a fresh, more affordable electric car, the Model 3. Then in June, Musk disclosed an idea for Tesla to get residential solar power 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.

Concurrently, Tesla is struggling to meet up its targets for building and delivering its Model S sedans and Model X sport utilities. The business reported through the long July 4 holiday weekend that it had delivered 14,370 vehicles through the second quarter, short of its target of 17,000 vehicles.

(Additional reporting by Arunima Banerjee in Bengaluru, David Shepardson in Washington and Alexandria Sage in SAN FRANCISCO BAY AREA; Editing by Anil D’Silva, Tom Brown and Bill Rigby)

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