The Securities and Exchange Commission (SEC) is suing Elon Musk, CEO of Tesla over “a series of false and misleading tweets about a potential transaction to take Tesla private.” according to their press release.
On August 7th, Elon Musk tweeted he was considering to take Tesla private.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
According to the SEC, the “complaint alleges that, in truth, Musk had not discussed specific deal terms with any potential financing partners, and he allegedly knew that the potential transaction was uncertain and subject to numerous contingencies.”
The tweet caused Tesla stock to jump 6%, and the SEC believes it has enough ground to charge Elon Musk for misleading the public and using his 22+ million followers as a way to manipulate the stock.
What’s more alarming, is that the SEC wants to strip Elon Musk from any involvement in Tesla. According to CNNMoney, “The real shocker is the SEC wants a judge to bar Musk, the company’s chairman and CEO, from serving as an officer or director of a public company. “This is a nuclear threat to force him to settle,” said John Coffee, a professor at Columbia Law School.”
The entire complaint is published on SEC’s website.
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Update: Elon Musk has agreed to settle the lawsuit against him and pay the SEC $20 million. In addition, Tesla will also pay $20 million as penalty for failing to properly curtail Elon Musk. Tesla stock has rocketed after the announcement has been made.