The Securities and Exchange Commission charged Tesla CEO Elon Musk with fraud, alleging that Musk made “false and misleading” statements when he tweeted he was considering taking the company private, with “Funding secured.” At the time, Musk also tweeted investor support was confirmed, contingent on a shareholder vote.
Tesla CEO Elon Musk’s tweeting about taking the company private, with “funding secured,” took investors and the company by surprise. On Thursday, September 27, the Securities and Exchange Commission (SEC) filed suit against Musk, charging him with securities fraud, according to court documents.
The SEC alleges that Musk made “false and misleading” statements on Twitter when he stated, “Am considering taking Tesla private at $400. Funding secured.”
Musk followed up the original tweet, saying “Shareholders could either to sell at 420 or hold shares & go private.”
The SEC also alleged Musk did not properly inform securities regulators of what were considered material events.
Musk stated later in the month that when he proposed the $420 per share price, he was confident the funding he referred to would materialize at that price after prior discussions with Saudi Arabia’s Public Invest Fund, according to CNBC .
The SEC’s complaint alleged:
Other Tesla executives, including the Tesla head of Investor Relations, were not informed about Musk’s plan to take the company private or make a statement to that effect.
Tesla was not named in the SEC lawsuit, although CNBC reported that sources close to Tesla told the news outlet that the company expected to be sued.
If Musk is found guilty of the fraud charges, the SEC wants to bar him from serving any publicly traded company as an officer or director, CNBC reports.
