The SEC's primary concern in this case would be to protect investors from a "pump and dump" move by Musk, however if that was his intention, it appears to have backfired, as Tesla share prices have been retreating since trading of the stock was unfrozen late last week.
A Tesla spokesperson told Engadget that those claims aren't true at all and that it has never used punctured cells in any Model 3 vehicles.
The SEC has reportedly demanded more information regarding the statement that.
The Twitter post by Musk, who has considered taking Tesla private in the past, was something of a flip remark, said several people familiar with the matter but not authorized to speak publicly about the episode.
Tesla's board of directors has been attempting to limit the fallout from Musk's actions, with some members asking the CEO to stop tweeting. Subpoenas typically indicate the SEC has opened a formal investigation into a matter.
Tesla and the SEC declined to comment. "Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction". He is ready to offer those interested in selling their Tesla stock $420 per share, while Tesla employees will remain shareholders of the carmaker.
The proposal for Saudi Arabia to finance Tesla's privatization may prove hard due to Saudi Arabia's Public Investment Fund (PIF) being tied up in other investments, and Saudi Arabia's illiquid market.
Musk will also likely require clearance from USA national security officials if financing comes from Saudi Arabia, according to Bloomberg.
Mr Musk tweeted on Monday that he was working with Goldman Sachs and private equity firm Silver Lake.
Teslas' board of directors is also understood to have sought legal advice and will retain their independent financial adviser to assess any potential Musk plan.