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Elon Musk, Tesla reportedly under investigation for a glass house

On Behalf of | Sep 6, 2023 | Investigations & Regulatory Compliance

It would probably surprise no one that Tesla and its controversial co-founder Elon Musk are currently under investigation on two separate fronts by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). 

The U.S. Attorney’s Office for the Southern District of New York (SDNY) is investigating whether the electric vehicle manufacturer misstated the battery range on its cars in its advertising. Further, it’s been reported that the cars show drivers a greater amount of range left than they actually have before the vehicle needs recharging. The automaker is already under DOJ investigation for the safety of its self-driving features.

Project 42

The Wall Street Journal has also reported that the SEC as well as federal prosecutors are looking at something that was internally labeled inside Tesla as “Project 42.” The highly secretive project reportedly involves using company assets to build a “dramatic glass-walled building” near a large Tesla facility in Texas for Musk’s personal use. The floor plans have been said to resemble those of a home.

Although the SEC says that it “does not comment on the existence or nonexistence of a possible investigation,” Musk has commented on his social media site X (formerly Twitter). He posted, “I’m not building a house of any kind, let alone a glass one!”

Tesla’s own board of directors, however, is reportedly also investigating “Project 42,” and just how involved company employees (and Musk) have been in it. Using a publicly owned company’s assets and employee manpower to build a property for an executive’s personal use could certainly trigger shareholder lawsuits – not to mention an IRS investigation.

Musk, Tesla have faced SEC sanctions in the past

This wouldn’t be the first time Musk has faced SEC investigations and consequences. Five years ago, the SEC charged both Musk and the company with securities fraud after he teased on social media that he would make the company private and already had the funding to do so.

Most organizations and their leaders aren’t as familiar with SEC investigations as Tesla and Musk are. Indications of an impending investigation can be daunting and even frightening. Your best first step is to seek experienced legal guidance.