The US’s top financial watchdog has reportedly sent subpoenas to Tesla regarding chief executive Elon Musk’s plans to take the company private.

Fox Business Network reported on Wednesday, citing sources, that the Securities and Exchange Commission (SEC) is formally investigating Musk’s recent tweets that he had “secured” funding to take the troubled electric vehicle company private.

Tesla’s shares fell 4% on the latest news. They had risen by 11% shortly after Musk’s original tweet.

Last week Musk said on Twitter that he was considering taking Tesla private at $420 per share. The tweet may have violated US securities law if it ultimately proves to be untrue.

On Monday Musk published a blogpost in which he claimed that Saudi Arabia’s sovereign wealth fund has made several approaches to Tesla offering to help take it private. The fund currently owns 5% of Tesla.

A formal SEC investigation would be another major headache for Musk. Tesla has struggled to make a profit and is rapidly burning through its remaining cash. He has clashed with financial analysts and is now being sued by investors who claim his tweets amount to false and misleading statements that were designed as a “nuclear attack” to “completely decimate” short-sellers – investors who bet on a company’s share price falling.

On Monday Musk attempted to justify his decision to tweet about taking the company private. “The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private,” Musk wrote. “However, it wouldn’t be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time.”

According to Fox Business the San Francisco office of the SEC has sent subpoenas to Tesla demanding more information on Musk’s statements about the privitization plans and that funding had been “secured”.

Neither Tesla nor the SEC were immediately available for comment.

While a formal investigation is likely to rattle Tesla, its board and Gene Munster, a Tesla investor and managing partner of venture capital firm Loup Ventures, said he was not convinced that Musk had violated securities law.

“We do not believe Elon Musk is at legal risk with his use of the term ‘funding secured’,” he wrote in a note to investors on Monday. “Today’s blog post argued it was Musk’s interpretation that the funding was secured. While we are not securities law experts, our interpretation is the previous meetings with the Saudis created enough grey area to dismiss stock manipulation legal risk from the SEC. That said there are at least two class action lawsuits underway which may take months to settle.”

