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UPDATE 2-SEC subpoenas Tesla on Model 3 production estimates


Reuters
Updated: 02-11-2018 21:17 IST
Tesla Inc said on Friday it received a subpoena from the U.S. Securities and Exchange Commission regarding Model 3 production forecasts the electric-car maker made in 2017.

Tesla has repeatedly missed its own production deadlines for the crucial Model 3 sedan, and is being investigated by multiple government agencies for misleading investors about its business.

The company said in a filing that no government agency in ongoing investigations has concluded that any wrongdoing occurred.

"It sounds like the SEC is looking at whether or not the projections that had been made were based on fact or not," said Jay Dublow, a partner with Pepper Hamilton LLP.

"It is possible for another SEC enforcement action down the road if it turns out that the projections were purposefully or recklessly made without a basis," Dublow, a former branch chief in the SEC's enforcement division, said.

A Tesla spokesperson told Reuters in October that the company had received a voluntary request from the Department of Justice for documents related to Model 3 production forecasts.

The Federal Bureau of Investigation is also examining whether Tesla misstated information about Model 3 production going back to early 2017, according to reports.

Peter Haveles, a partner at Trial and Dispute Resolution Practice Group, said the SEC would not be able to press charges if there was a basis for the projections.

"However, as was the case with the tweets regarding going private, if the SEC concludes that the projections and comments were made without a reasonable factual basis, it is likely that the SEC will commence a new enforcement proceeding against Tesla," Haveles said.

The Wall Street Journal reported https://www.wsj.com/articles/sec-pressing-tesla-directors-for-details-on-communications-with-elon-musk-1534450010 in August the SEC had launched an investigation into the company's Model 3 production disclosures in 2017.

In September, Musk and Tesla settled with the SEC over Musk's Aug. 7 tweets that he planned to take the company private for $420 and had secured funding for a deal.

The settlement required Tesla and Musk to pay a fine of $20 million each. In addition, Musk also had to give up his chairman role for three years.

Tesla is still below its weekly production target of 5,000 Model 3s, but managed to turn a profit in its third quarter, as promised by Musk.

Earlier on Thursday, Tesla said it was developing plans to start producing about 3,000 Model 3 vehicles per week in Shanghai in the initial phase of its Gigafactory 3 to reduce the impact of tariffs.

The company said https://www.sec.gov/Archives/edgar/data/1318605/000156459018026353/tsla-10q_20180930.htm#ITEM1_LEGAL_PROCEEDINGS in a filing that Model S and Model X sales in China have been, and will likely continue to be, hurt by recently increased tariffs imposed by the Chinese government on U.S.-manufactured vehicles.

Tesla shares were down 0.5 percent at $342.38 in midday trading. (Reporting by Vibhuti Sharma and Akanksha Rana in Bengaluru; Editing by Bernard Orr and Saumyadeb Chakrabarty)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)