Tesla & Musk under investigation by US prosecutors for investor deception

The federal prosecutors' criminal investigation on Tesla and Elon Musk is distinct from the US National Highway Traffic Safety Administration's (NHTSA
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Tesla
The US Securities and Exchange Commission (SEC) is looking into whether Tesla and Musk committed securities fraud by misleading investors about their 'Autopilot' and 'Full Self-Driving' systems.
Tesla
The US Securities and Exchange Commission (SEC) is looking into whether Tesla and Musk committed securities fraud by misleading investors about their 'Autopilot' and 'Full Self-Driving' systems.

It seems that Tesla’s problems are far from over. US prosecutors are investigating Tesla and its CEO, Elon Musk, over potentially false claims that may have deceived investors. The US Securities and Exchange Commission (SEC) is looking into whether Tesla and Musk committed securities fraud by misleading investors about their 'Autopilot' and 'Full Self-Driving' systems. They are determining if these statements were knowingly false or merely aspirational.

A report by Reuters stated that authorities are also exploring the possibility of 'wire fraud,' which involves intentionally devising a scheme to defraud others of money using interstate communications.

This criminal investigation is separate from others conducted by the US National Highway Traffic Safety Administration (NHTSA) regarding steering failures, suspension defects, and accidents involving Tesla's semi-autonomous driving systems.

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While these investigations do not indicate wrongdoing, some public statements made by Tesla and Musk could lead to criminal charges or civil sanctions if found guilty in court. However, Tesla's lawyers argue that failing to achieve a long-term goal is not fraud.

US courts have previously ruled that 'puffery' and 'corporate optimism' in public statements do not constitute fraud. To prove fraud, authorities must show that Musk and other high-ranking officials knew the claims were false when they made them.

Also Read : Tesla CEO announces expansion of EV Supercharger network amid job cuts

Earlier it was reported that Nora Bass, the widow of a man who tragically died in a Tesla crash, is suing the carmaker, alleging that its marketing of the Autopilot system is dangerously misleading. The incident, which occurred in 2022 in Colorado, involved Hans Von Ohain, whose Tesla veered off the road and crashed into a tree while he was using the partially automated driving system.

According to the lawsuit filed by Bass in state court on May 3, the Autopilot system prevented Von Ohain from maintaining control of his Model 3 Tesla. The crash resulted in Von Ohain's death as the car burst into flames upon hitting the tree. Fortunately, a passenger in the vehicle was able to escape.

First Published Date: 12 May 2024, 14:17 PM IST
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