He’s being sued by USA securities regulators, who’ve filed a complaint against the controversial Tesla chief executive in federal court in NY related to that nine-word tweet he dashed off last month proposing to take the electric carmaker private.
What’s more, the lawsuit seeks to ban Musk from serving as an officer of a public company. In total, shares closed the trading day up 11%, but some of that gain happened before the tweet.
Besides creating “significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors”, the SEC said that Musk did not consult with Tesla’s board, other employees or outside advisors about the tweets before sending them. I have always taken action in best interests of truth, transparency and investors.
Tesla shares quickly fell some 10 percent after the word of the filing came Thursday afternoon.
The SEC conducted interviews confirming that Musk had been holding talks with a sovereign investment fund – identified by Tesla as Saudi Arabia’s Public Investment Fund – dating back to January.
Without disputing the reference to cannabis, Musk was quick to criticize the SEC’s decision to bring an enforcement action.
By July 31, the discussions had escalated to the point that Musk floated the idea of pursuing a buyout that would end Tesla’s eight-year stint as a publicly held company.
Musk claimed in a series of tweets in August that funding for the transaction had already been secured, and the only hurdle to clear was a shareholder vote. This purchase price reflected a premium over Tesla’s stock share price at the time. Additionally, the SEC alleges that Musk failed to notify regulators about his plans to take the company private.
Tesla and SpaceX supremo Elon Musk has been accused of fraud by America’s financial watchdog – after he mused on Twitter about taking his automaker private.
Tesla’s market capitalisation has soared to well beyond $US50 billion – and on occasions has overtaken both GM and Ford as the biggest vehicle manufacturer by value in the USA, despite it only having a fraction of the sales.
Musk didn’t clarify his statement until an August 13 blog post in which he tried to walk back the tweet.
The only problem with that, according to the SEC’s lawsuit, is that funding was definitely not secured, and Musk allegedly did this fully in the knowledge that he was never going to take the company private, and that he knew it would send the stock price all over the place.
After Stephanie Avakian and Steven Peikin recapped the details of the lawsuit (tl;dr: Musk lied, and he shouldn’t be able to get away with it), they briefly answered questions from reporters.