The Securities and Exchange Commission has opened an investigation regarding Tesla Motors Inc. potentially breaching U.S. securities laws by failing quickly to disclose that a Model S driver died watching a Harry Potter DVD with the car’s autopilot engaged.

Breitbart News reported on July 1 that the National Highway Traffic Safety Administration’s (NHTSA’s) “Office of Defects” had initiated a formal “review” to “examine the design and performance of any automated driving systems in use at the time” of May 7 death of a Tesla driver.

Driver Joshua Brown was decapitated when his car traveling at normal speed “T-boned” a 65-foot-long 18-wheel semi-truck that was making a legal left turn on a Florida two-lane highway.

Chief Executive Officer Elon Musk appears to have exploited a regulatory loophole that allowed Tesla to “beta test” semi-autonomous driving features using un-trained consumers operating a 5,000 pound vehicles on public highways.

Clarence Ditlow, executive director of the Center for Auto Safety, told Bloomberg that if the Tesla autopilot system did not recognize the semi-truck, Tesla must immediately recall all vehicles equipped with this system. He warned, “When you put Autopilot in a vehicle, you’re telling people to trust the system even if there is lawyerly warning to keep your hands on the wheel.”

The SEC is examining whether Tesla had a duty to disclose the accident immediately as a “material event,” so that a reasonable investor would be able to consider the fundamental impact on Tesla’s business and the value of its stock.

Despite Tesla on May 16 beginning to investigate if the Model S autopilot had been engaged during the crash, the company on May 18 went ahead and sold $2 billion of Tesla stock in an SEC registered secondary issue, including about $500 million for CEO Musk, without disclosing the crash and fatality.

Tesla acknowledges that after complying with a law requiring the reporting of any death involving a self-driving car, Tesla sent an investigator on May 18 to Florida to retrieve data from the car for the first time. Tesla’s spokesperson claims the company did not complete a review of Model S “black box” recorder until the last week of May.

When the NHSTA announced its investigation on July 1, Tesla seemed to dismiss the “materiality of the event” when they commented:

This is the first known fatality in just over 130 million miles where Autopilot was activated. Among all vehicles in the US, there is a fatality every 94 million miles. Worldwide, there is a fatality approximately every 60 million miles. It is important to emphasize that the NHTSA action is simply a preliminary evaluation to determine whether the system worked according to expectations.

Tesla’s spokeswoman told the Wall Street Journal, “Tesla has not received any communication from the SEC regarding this issue.” She added, “Our blog post last week provided the relevant information about this issue.”

Tesla (OTC: TSLA) stock jumped 3.69 percent to $224.78 during normal trading hours on July 11. But after the SEC investigation was leaked, Tesla stock fell 1.4 percent to $221.60 in after-hours trading.