SEC investigates Tesla for possible securities law breach: WSJ

Mon Jul 11, 2016 8:48pm EDT
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By Joseph White

DETROIT (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 in the car 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 "has not received any communication from the SEC regarding this issue." The SEC declined to comment.

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

The stock had risen 3.7 percent during regular trading, following a tweet on Sunday by Chief Executive Elon Musk 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."

In its report on Monday, the Journal said 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.

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

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

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