SEC files lawsuit against Elon Musk
Charges false statements about Tesla going private in tweet were fraudulent
DETROIT— U.S. securities regulators are asking a federal court to oust Tesla Inc. CEO Elon Musk, alleging in a complaint that he committed securities fraud with false statements about plans to take the company private.
The Securities and Exchange Commission says in the complaint filed Thursday that Musk falsely claimed in an Aug. 7 statement on Twitter that funding was secured to take the company private at $420 per share, a substantial premium over the price at the time.
The complaint filed in the U.S. District Court in Manhattan says that Musk had not discussed or confirmed key deal terms including price with any funding source. It also asks for an order enjoining Musk from making false and misleading statements along with repayment of any gains as well as civil penalties.
“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” Steven Peikin, co-director of the SEC’s enforcement division, said in a statement. “An officer’s celebrity status or reputation as a technological innovator does not give licence to take those responsibilities lightly.”
An SEC news release says it has asked the courts for a “bar prohibiting Musk from serving as an officer or director of a public company.”
Tesla issued a response from Musk via email.
“This unjustified action by the SEC leaves me deeply saddened and disappointed,” he said in the statement. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
The SEC alleged in the 23page complaint that Musk made the statements using his mobile phone in the middle of a trading day. That day, Tesla shares closed up 11 per cent from the previous day.
“He did not discuss the content of the statements with anyone else prior to publishing them to his over 22 million Twitter followers and anyone else with access to the internet.”
The statements, the complaint said “were premised on a long series of baseless assumptions and were contrary to facts that Musk knew.”
Tesla shares fell 11 per cent in after-hours trading to $273.56, after falling 2 per cent before the market closed Thursday.