Last week, the iconoclast CEO raised eyebrows when he announced plans to take the electric car manufacturer private over Twitter. Now Tesla board members are reportedly concerned about his loose lips on social media.

By Daniel Herborn

Posted on August 15, 2018

Musk’s move to announce plans for such a major change to the business were described as “unprecedented” and “chaos” by industry observers.

The possibility of Tesla going private was apparently news to some other board members and was seen as evidence of Musk’s erratic leadership style. Board members have become concerned at Musk’s penchant for musing about big picture strategy on Twitter and have told him firmly to get off social media.

Paul Argenti, a corporate communications expert at Dartmouth College, has echoed these concerns. “At some point somebody, like an adult, has to come in and say, ‘Mr. Musk, you need to be more careful about your communications,'” he told CNBC’s Power Lunch.

Musk’s blog post failed to calm board members

On 13 August Musk made a blog post titled “Taking Tesla Private” in which he outlined how he had met with a representative from a Saudi Arabian wealth fund who assured him they could make available necessary funding for the move.

The post only served to further muddy the waters, however, and three sources familiar with the fund disputed the version of events in Musk’s post. They said numerous steps such as hiring a financial adviser and preparing a term sheet would need to be completed before the deal could go ahead.

Further, such an agreement would need to be reviewed by the Committee on Foreign Investment in the United States which adjudicates on the national security implications of such transactions.

A spokesman for the Saudi investment fund declined to comment to The New York Times.

Tesla does have authorisation to use Musk’s Twitter feed to disclose information to shareholders but securities law requires that relevant information is made available to all shareholders at the same time. There was no announcement of the company going private in other forums for shareholders not monitoring Twitter.

Further, Musk’s assertion of “funding secured” on Twitter may fall short of legal requirements about the accuracy of statements to shareholders.

The outside board members have now retained their own lawyers from two firms on two separate matters. Firstly, the lawyers will represent them on a Securities and Exchange Commission (SEC) inquiry into Musk’s social media posts, which some experts felt may constitute securities fraud. Another firm will advise them on any proposal to take Tesla private that Musk puts forward.

Experts advising Musk to strike a deal with the SEC

Per Musk’s own blog, he was in the process of securing funding rather than having completed this process.

John Coffee, Jr., the Director of the Center on Corporate Governance at Columbia Law School, told Wired: “There are enough concessions in the blog post about this being subject to financial and due diligence review and final approvals to determine that Musk didn’t have funding secure. He had at best, a hope for it.”

In light of this, coffee suggest Musk accept a deal with the SEC rather than take it on in a court battle that could cost Tesla millions.

In the meantime, Musk has amused himself by taking a veiled swipe at Tesla short sellers. “Short shorts coming soon to Tesla merch,” he wrote on 10 August.

Header image credit: Heisenberg Media