In his typically unconventional style, Mr Musk tweeted earlier this month on August 7 that he was “considering taking Tesla private at $420 (£330). Funding secured.”
However, Mr Musk’s public statement, saying he had “funding secured”, may have violated a Security and Exchange Commission (SEC) rule stipulating public statements made by company executives must be true.
The potential violation has resulted in federal security regulators issuing Tesla with a subpoena (court summons).
Fox Business Network first reported the news of the court summons.
The New York Times reported it had become clear after the initial tweet that neither Mr Musk nor Tesla had actually lined up the necessary financing, aside from having preliminary conversations with some investors.
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In response, Mr Musk contended earlier this week the Saudi Arabia sovereign wealth fund had expressed an interest in taking Tesla private.
The Saudi acquisition wouldn’t be the first foreign stake in Tesla.
According to data compiled by Bloomberg, China’s Tencent Holdings Ltd owns almost 5 percent of the company.
The Tesla deal, if it comes to fruition, would be among the first be reviewed by US officials since President Donald Trump signed legislation this week to expand his administration’s authority to investigate and potentially block foreign takeovers of domestic companies.
Mr Trump’s move demonstrates the President is ramping up security measures concerning foreign investment in US-based tech companies.
Much of the legislation he signed off will not come into effect straight away.
But the measure highlights the administration’s intent to use the Committee on Foreign Investment in the US (CFIUS) to increase scrutiny of foreign acquisitions.
Joseph Falcone, a partner at Herbert Smith Freehills in New York, told Bloomberg: “The new law makes it pretty clear that this administration is very keen on protecting US technology.
“Any foreign investment in Tesla would at least notionally be of interest to CFIUS.”
Even before the law was passed, a major investment by Saudi Arabia in Tesla would certainly have drawn scrutiny.
Thad McBride, a lawyer at Bass, Berry & Sims in Washington, who works on cross-border deal reviews, said: “The big question is whether this technology is really sensitive enough and whether if acquired by a non-US company it could have some kind of negative impact on US national security.”
A Treasury-led review would complicate Mr Musk’s bombshell proposal to take Tesla off the market – an announcement that has already raised eyebrows in the SEC.
Shares of Tesla were down 3 percent in afternoon trading, though they moved only a fraction of 1 percent following the publication of an article from The New York Times on Wednesday.
The article argued Tesla’s board of directors had been scrambling to contain any potential damage caused by Mr Musk’s August 7 tweet.
It also revealed some board members had urged Mr Musk to stop using Twitter.