Elon Musk hires Morgan Stanley, closing book on ‘funding secured’

The SEC will now determine Musk’s fate in terms of potential punishments for misleading the market. For a while, Musk supporters may have felt he could skirt a fine claiming “secured” meant he had the financing locked down, even if he didn’t have committed documentation (the No. 2 option here). But now even that seems like a long shot if banks are being brought in to raise capital weeks after his initial tweet.

Former SEC commissioner Laura Unger told CNBC last week she thought some sort of enforcement against Musk was “substantially likely.” The SEC has a broad range of tools at its disposal, ranging from a fine to barring officers and directors who are unfit for their office, she said.

A fine would probably amount to a slap on the wrist for Musk, who is worth about $20 billion. According to a Reuters report, the average SEC fine doled out in 2018, for a variety of infractions, is just $75,000.

Barring Musk from Tesla, in any significant way, would not only doom the take-private effort, it would have serious ramifications on the stock. Much of Tesla’s value is wrapped up in Musk’s vision for the company.

The overhang of the SEC investigation is yet another hurdle that will need to be overcome to take Tesla private, which is looking like an increasingly onerous task for everyone involved.

Tesla did not immediately respond to requests for comment.

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