Published: Fri, September 28, 2018
Culture | By Jeremy Gray

SEC suit accuses Elon Musk of misleading investors, deepening his legal woes

SEC suit accuses Elon Musk of misleading investors, deepening his legal woes

In a lawsuit filed on Thursday, the SEC said that Musk's tweet (below), which caused Tesla shares to climb 11 per cent, constitutes fraud for containing "false and misleading statements" as Musk "never discussed a going-private transaction at $420 per share with any potential funding source".

It was all moonshine, the SEC's legal complaint, filed in NY, alleged: there was no funding, and no real move to take Tesla private, it was claimed.

According to the SEC, Musk tweeted all this knowing it wasn't true, and without the input of his fellow Tesla executives.

In its filing, the SEC said the August statements were "false and misleading" and Musk had never discussed the plans with company officials or potential funders.

The SEC filing said funding was not secured because Musk had never discussed it with any potential financial sources, he had never investigated whether the "special objective fund" could be created, and he hadn't received "confirmed" support for the proposed transaction.

Tesla stock plunged 12 percent in after-hours trading.

This is a breaking news story.

He told Business Insider on Thursday: "This unjustified action by the SEC leaves me deeply saddened and disappointed".

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Whatever the plans have been are now postponed until Thursday at the earliest, when Trump and Rosenstein are set to meet. Thompson did not immediately reply to a request on Monday for comment on Cummings' latest request.

The SEC reaffirmed its commitment to holding individuals to account, adding: "Neither celebrity status nor reputation as a technological innovator provide exemption".

Musk is seen as the irresistible driving force behind the company, which has virtually single-handedly changed world views about electric vehicles, and accelerated the shift away from petrol and diesel cars. Tesla said the DOJ requested documents last month regarding Musk's tweets about taking the company private.

Musk tweeted back in August that he considers taking Tesla private, following several meetings with representatives from the Saudi Arabian sovereign wealth fund that lead to him being under the impression that the Saudis would financially back such a move. We've reached out to Tesla, Elon Musk, and the SEC for more information.

Pending final judgement from the court, Musk will remain as chief executive at Tesla unless he or its board decide otherwise.

You can read the SEC's full 23-page complaint here.

The lawsuit said he made a series of "false and misleading" tweets about potentially taking the electric vehicle company private.

Without disputing the reference to cannabis, Musk was quick to criticize the SEC's decision to bring an enforcement action. Shares are down over 14 percent in after-hours, worth about $8 billion in market capitalization.

Nasdaq, which requires advance notice of market-moving announcements, had not received one, Peikin said, and halted trading for 90 minutes after Tesla's shares jumped.

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