Dec. 15 (UPI) -- Tesla Motors was under formal Securities and Exchange Commission investigation for a year but did not notify investors, a new report says.
The SEC investigated the California-based company's method of requesting a $1,000 down payment from customers for future delivery of the unbuilt Tesla 3, an electric-powered sedan meant to sell at $35,000 each. The up-front funding was meant to increase cash flow to produce the car, investment research firm Probes Reporter said on Thursday.
The SEC asked for names of prospective purchasers, as well as their credit card numbers, presumably to demonstrate that individuals actually reserved a car. It also investigated the timing of a Goldman Sachs analyst report upgrading Tesla, prior to Tesla's announcement of a $2 billion stock offering. Investment bankers Goldman Sachs and Morgan Stanley were Tesla's lead underwriters.
The investigation ended in May with no enforcement action recommended, Probe Reporters determined.
The documents show that the SEC began its investigation to learn if the company was disclosing facts about the Tesla 3, its production or its anticipated delivery dates, the San Jose Mercury-News reported on Thursday. The report suggested that one other SEC probe of Tesla is still in progress.
"There's more than enough here to conclude this investigation should have been disclosed by Tesla. Investor focus on the Model 3 has been intense this past year, with Elon [Tesla founder and CEO Elon Musk] and his crew fanning the flames. With this backdrop, we think investors most certainly would consider an SEC probe that asked a lot of questions about the Model 3 to be material and, therefore, would have wanted to know about it," Probes Reporter commented on Thursday.