The Wall Street Journal reported today after market close that the Securities and Exchange Commission (SEC) is in the early stage of investigating Tesla (TSLA) over a potential securities law breach regarding the disclosure of the fatal Model S crash in Florida while the driver was using the Autopilot.

The issue first arose last week when Fortune reporter Carol J. Loomis tied Tesla’s $2.3 billion secondary offering announced on May 18 with the recent fatal accident in a Model S on Autopilot. Tesla didn’t publicly disclose the news of the crash, which occurred on May 7, until June 30 when NHTSA announced that it will be investigating the accident.

The problem revolves around whether or not the accident is considered material to Tesla’s valuation at the time of the stock offering on May 18. Loomis argued that it was, while Tesla CEO Elon Musk argued against it.

Fortune later implied, using a boilerplate statement from Tesla, that Musk and the company previously considered the accident a material event, which would constitute a security fraud according to the Fortune reporter.

We explained in our piece ‘Tesla/Elon Musk’s words twisted in attack over material disclosure of fatal Model S Autopilot accident‘ that Fortune was misinterpreting the statement, which Tesla later confirmed in a blog post called ‘Misfortune‘.

Fortune stood behind its reporting that Tesla considered the event to be material at the time the company issued a secondary offering.

After the WSJ released news of the investigation, we reached out to Tesla and a spokesperson sent us the following statement:

“Tesla has not received any communication from the SEC regarding this issue. Our blog post last week provided the relevant information about this issue.”

We will keep you updated on any development.

About the Author