He is still tweeting away.
Elon Musk isn't doing himself any favors by tweeting about taking Tesla (TSLA) - Get Tesla Inc Report private, as questions remain about the legality of his claim that funding for the transaction had been secured, lawyers said.
Musk tweeted last night that Tesla will be working with Goldman Sachs Group (GS) - Get Goldman Sachs Group, Inc. (GS) Report and Silver Lake Partners on a potential deal. CNBC then reported that Tesla's board of directors is forming a special committee to evaluate the idea of a deal. On Monday, Musk posted on Tesla's website saying that he had approached his board about the idea. He also said a meeting comprised of Tesla's outside board of directors was held, after which it was agreed that Musk would then reach out to the largest shareholders of the company.
Musk said the reason he said "funding secured" was because the Saudi Arabian Sovereign Wealth Fund had asked Musk if he'd be interested in selling Tesla to the fund. Musk said the fund has more than enough capital to execute the transaction, and that most of the financing would be equity, not debt. He said "I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving."
Nothing in his remarks concerning the Saudi wealth fund clarifies his enigmatic assertion that funding has been secured. Moreover, his insistence of speaking publicly does nothing to either advance a takeover or to quell questions about whether he was telling the truth, said Steve Thel, a law professor with expertise in securities regulation at Fordham Law School.
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"If what he's trying to do is put together a takeover he should be quiet," Thel told TheStreet in a phone interview. "Most people's advice to him would be not to talk. This ongoing commentary that is not entirely complete is causing problems."
Columbia Law School professor John Coffee said last week that Musk should apologize for the remarks. "If I were representing Tesla or Musk, I'd try to get a quick SEC settlement, apologizing, making corrective disclosures, not fighting them," Coffee told TheStreet.
The "not entirely complete" issue Thel raised refers to the "funding secured" comment. "Saying you've secured funding is saying that you have a binding arrangement for it," Thel said. "Until they've said, they've made a firm commitment, the idea that you've secured funding is simply not true."
That is, just because Musk said he walked away from a meeting thinking that a deal with the Saudi Arabian Sovereign Wealth Fund could be closed isn't enough to support his claim on Twitter about having funding.
That's another reason why Musk should lay off Twitter and blog posting, Thel said. Even if the blog post was an attempt to correct what was said on Twitter, "in some ways that simply confirms that the statements made before were not true" because "the statement falls short of saying funding is secured," Thel said.
That's Coffee's view as well.
"Musk only had a strong expression of interest from the Saudi fund but nothing close to a firm commitment," Coffee said. "And thus his "funding secured statement" was a material overstatement."
Short-sellers have sued Musk, and as of right now, the SEC has merely inquired about the situation.
Tesla shares fell less than 1% early Tuesday.