The US Securities and Exchange Commission on Thursday filed a lawsuit against Tesla CEO Elon Musk accusing him of securities fraud.
In its complaint, the regulatory body claimed Musk misled investors by making a series of “false and misleading” tweets last month. Notably, the Tesla CEO shared a tweet on August 7 informing his 22 million Twitter followers that he might take Tesla private at $420 per share and that there was “funding secured”.
“Am considering taking Tesla private at $420.Funding secured,” Musk’s tweet read.
The SEC pointed out that Musk made false claims as he had not actually secured the funding.
“In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the SEC noted in its complaint.
The regulator complained that the tweet, and subsequent tweets from Musk posted over the next three hours, caused a lot of confusion and disruption in the market for Tesla’s stock. The tweet immediately caused a brief spike in Tesla’s share price which shot up nearly 9 percent. Tesla’s stock has declined substantially since then.
According to the complaint, Musk decided on $420 because of the number’s significance in marijuana culture. The complaint quoted Musk as saying he thought his girlfriend would find it funny.
The SEC wants Musk to be barred from serving as an officer or director of a public company.
Musk defended himself, calling the SEC lawsuit an unjustified action that has left him “deeply saddened and disappointed.” The CEO said he has always taken decisions which are in the best interests of truth, transparency, and investors.
Meanwhile, Tesla and its board of directors have released a joint statement that says that they are fully confident in Elon, his integrity, and his leadership of the company.
“Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees,” the statement said.
