Technology

Elon Musk ‘deeply saddened and disappointed’ by legal action

Carmaker’s chief executive has been sued by SEC over Tesla buyout claims in a tweet

Elon Musk had signalled through tweets a possible deal to take Tesla private. Photograph: Reuters

Thu Sep 27 2018 - 21:45

Elon Musk has been sued by US regulators over his claims last month that he was close to a buyout of electric carmaker Tesla.

The complaint, from the Securities and Exchange Commission (SEC), alleges that the Tesla chief executive officer made "false and misleading statements" last month when he took to Twitter to reveal his plan.

Mr Musk has said the "unjustified" legal action against him has left him "deeply saddened and disappointed".

“I have always taken action in the best interests of truth, transparency and investors,” he said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

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A joint statement from Tesla and its board reaffirmed its confidence in Mr Musk.

“Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful US auto company in over a century,” it said.

“Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees.”

The SEC complaint was filed in federal court in Manhattan on Thursday afternoon.

“Musk’s statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price, that funding for this multibillion-dollar transaction had been secured, and that the only contingency was a shareholder vote,” the SEC said. “In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”

Several days after his tweets, Mr Musk claimed that he had believed a $70 billion (€60 billion) buyout was within reach because of an informal discussion he had had with an official from Saudi Arabia, a potential backer.

‘Highly uncertain’

But the SEC said that the Tesla boss had “never discussed a going-private transaction at $420 per share with any potential funding source,” and that he “also knew that he had not satisfied numerous additional contingencies, the resolution of which was highly uncertain.”

Tesla did not immediately respond to the complaint.

The SEC has also asked the court to bar Mr Musk from acting as the officer or director of a public company, casting a question over his continued leadership of Tesla at a critical moment.

Tesla shares were down 10.3 per cent in after-hours trade on Thursday. – Copyright The Financial Times Limited 2018

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