Tesla Inc. shares relinquished earlier gains and fell more than 5% on Tuesday after a report said the Silicon Valley car maker was under criminal investigation for Chief Executive Elon Musk’s going-private tweet.
Federal prosecutors have opened a fraud investigation to look into Musk’s statements on Twitter, Bloomberg News reported, citing two people familiar with the matter. Tesla did not immediately comment and a Justice Department spokesperson declined to comment, the report said.
Musk on Aug. 7 tweeted that he was “considering” taking Tesla TSLA, -5.30% private, followed by the phrase “funding secured.”
The tweet surprised Tesla’s other board members and created volatility in the stock with many investors and analysts questioning whether that phrase was accurate. The Securities and Exchange Commission is reported to be investigating whether funding had indeed been secured. Musk said on Aug. 24 he was keeping Tesla public.
Read more: Tesla may find it a challenge to remain an independent company, analyst says
Since then, the chief executive has been embroiled in more controversy, including appearing to smoke a joint during a filmed interview and being sued for defamation by a cave explorer involved in the rescue of a Thai youth soccer team.
Tesla shares had been rangebound in recent sessions, and are off 9% this year. That contrasts with gains of 9% and 6% for the S&P 500 index SPX, +0.59% and the Dow Jones Industrial Average DJIA, +0.58%
