US SEC charges Tesla CEO Elon Musk with fraud

Musk has been accused of making a series of ‘false and misleading’ tweets

Thursday’s lawsuit makes Musk one of the highest-profile executives to be accused by the SEC of securities fraud. Photograph: Brendan Smialowski/AFP

Thursday’s lawsuit makes Musk one of the highest-profile executives to be accused by the SEC of securities fraud. Photograph: Brendan Smialowski/AFP

 

The US Securities and Exchange Commission on Thursday sued Tesla Inc chief executive Elon Musk, accusing him of securities fraud.

The accusation was based off Musk making a series of “false and misleading” tweets about potentially taking the electric car company private.

In a complaint filed in Manhattan federal court, the SEC said Musk “knew or was reckless in not knowing” that he was misleading investors on August 7th by telling his more than 22 million Twitter followers that he might take Tesla private at $420 (€360) per share, and that there was “funding secured”.

The complaint also faults subsequent tweets in which Musk said “investor support is confirmed,” and that a “special purpose fund” might be created for investors who stick with the Palo Alto, California-based company.

Tesla was not immediately available for comment. Its shares fell 5.7 per cent in after-hours trading.

Thursday’s lawsuit makes Musk one of the highest-profile executives to be accused by the SEC of securities fraud.

It also seeks to bar him from running public companies, which would include Tesla, as well as a civil fine. The SEC does not have criminal enforcement power.

Musk has long used Twitter to criticise short-sellers betting against his company, and several investor lawsuits have been filed against him and Tesla over the tweets.

On August 24th, after news of the SEC probe had become known, Musk blogged that Tesla would remain public, citing investor resistance. – Reuters