The Securities and Exchange Commission (SEC) is investigating whether Tesla should have disclosed a fatal accident to its investors.
The accident took place on May 7 and the driver, Joshua Brown, was killed when his Tesla Model S with Autopilot activated crashed into an 18-wheel semi-truck in Florida. Although the American automaker did notify NHTSA of the fatality, it didn’t disclose the crash to investors in a securities filing.
The SEC is scrutinizing whether Tesla should have disclosed the accident as a “material” event, alluding that it’s a development a reasonable investor would consider important. The inquiry by the SEC is reportedly in the preliminary stages and may not lead to any enforcement action by regulators.
A Tesla spokeswoman has responded to the report, saying that the crash didn’t need to be disclosed to investors. The timing of the accident makes it all the more interesting, since Tesla was preparing to sell $2 billion in stock on May 18.
Securities experts believe there is no clearly defined standard on whether Tesla should have reported the accident to its investors, as automakers generally do not disclose traffic fatalities. Helping the American automaker’s case is the fact that Tesla shares didn’t drop following the public report of the fatality and have actually continued to rise since then.
[Source: The Wall Street Journal]
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