Musk lied to investors: SEC
The US Securities and Exchange Commission is suing Tesla chief Elon Musk, saying he lied to investors when he claimed he had secured the funding to take the automaker private.
In a complaint filed in Manhattan federal court yesterday (NZ time), federal regulators said ‘‘Musk’s false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors.’’
The charges are a dramatic setback for one of the tech industry’s most prominent and polarising executives.
The stock plunged more than 10 per cent in after-hours trading.
The company did not immediately respond.
The SEC said it is seeking to ban Musk from acting as an ‘‘officer or director’’ of any public company, a devastating punishment that would radically change Tesla, Musk’s rocket company SpaceX and his other business interests in solar energy and underground supertrains.
Musk tweeted on August 7 that he had the ‘‘funding secured’’ to complete a massive deal that would take the Silicon Valley automaker private, sending its stock soaring that day by nearly 11 per cent.
After 17 days, however, Musk announced that he would not pursue the deal, leading the stock to plunge amid growing scepticism over the company’s long-term prospects.
Neither Musk nor the company ever specified what funding Musk was referring to.
The SEC’s legal complaint depicts a time of chaos following Musk’s surprise tweets.
Roughly 35 minutes after Musk’s initial tweet, Tesla’s chief financial officer Deepak Ahuja sent a text message to Musk asking whether he wanted executives to ‘‘draft a blog post of employee email’’ to announce the marketmoving news.
‘‘Yeah, that would be great’’, Musk responded.
The Justice Department is separately investigating Musk’s statements to determine whether they were meant to mislead investors, according to a person familiar with the probe.
A Tesla spokesman said US Department of Justice investigators had requested documents last month and that the company had complied.
The company is also facing several shareholder lawsuits over Musk’s statements alleging fraud or market manipulation, as well as whistleblower complaints that Musk had lied to investors about the company’s production.
–The Washington Post