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Elon Musk tweeted that he was in serious trouble.
The U.S. Securities and Exchange Commission on Thursday sued Tesla’s chief executive, accusing him of making “false and misleading” statements to investors. It asked a federal judge to prevent Musk from serving as an officer or director of a public company and impose other penalties.
The key to the complaint is Tweets sent by Musk On August 7, news about Tesla’s privatization.
“I’m considering taking Tesla private at $420,” Musk said. “Funding is secured.”
The SEC said he did not actually receive the funds.
“In fact, Musk did not even discuss, let alone confirm, key transaction terms, including price, with any potential source of funding,” the SEC said in its complaint.
The SEC said the tweet, along with tweets posted by Musk over the next three hours, caused “significant confusion and confusion in the Tesla stock market” and caused harm to investors. On the day Musk tweeted, Tesla’s stock price soared nearly 9%. Since then, it has declined significantly.
Tesla’s (Tesla) The stock fell more than 11% in after-hours trading Thursday.
“I am deeply saddened and disappointed by this unfair action by the SEC,” Musk said in a statement. “My actions have always been in the interest of truth, transparency, and the best interests of investors. Integrity is my The most important value in life and it will be proven that I have never compromised that in any way.”
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Tesla and its board of directors said in a joint statement that they have “full confidence in Elon, his integrity and his leadership of the company.”
“Our focus remains on continuing to increase Model 3 production and serve our customers, shareholders and employees,” the statement said.
Stephanie Avakian, co-director of the SEC’s Enforcement Division, said at a news conference Thursday that the agency is committed to pursuing cases against people despite their “celebrity status or reputation as technology innovators.” People’s responsibilities.
The lawsuit alleges that Musk rounded the going private price to $420 per share “because he had recently learned about the importance of that number in cannabis culture” and thought his girlfriend would find it funny. He is dating musician Grimes.
Musk did not consult with any board members, employees or outside advisers before sending the tweet, according to the SEC.
“This is serious. That’s why we go after insider traders and market manipulators,” said Cornell Law School professor Charles Whitehead. “This is a serious allegation.”
Musk abandoned plans to take Tesla private less than three weeks after his first tweet. He later said his “funding is secured” comments were based on talks with Saudi Arabia’s sovereign wealth fund, which he said urged him to take the company private and offered to increase its investment in Tesla.
Tesla said last week that the Justice Department was also investigating Musk’s comments. The company said it had received the voluntary request for documents and was cooperating. Tesla said it has not received the subpoena.
Shareholders also filed a lawsuit accusing Musk of claiming stock price manipulation.
Musk’s erratic behavior has brought him a series of bad headlines. He has tweeted late at night and dismissed analysts on corporate earnings calls. He disparaged a man who was rescuing a trapped boy in Thailand and feuded with reporters and investors who he believed were treating him unfairly. Musk has vowed to launch a website called Pravda to criticize the media.
——CNNMoney’s Matt Egan and Jackie Wattles contributed to this report.
CNN Business (New York) First published September 27, 2018: 4:18pm ET