Elon Musk could lose control of Tesla due to fraud charge

Tanya Cunningham
September 28, 2018

The Securities and Exchange Commission sued Tesla CEO Elon Musk for securities fraud Thursday over his August 7 tweet when he announced he had "funding secured" to take Tesla private.

It was a short tweet that looks like it's going to end up costing Elon Musk big time.

FOX Business reported last month that the SEC ramped up its investigation into the automaker after Musk tweeted that he was considering taking the company private and that funding had been "secured".

According to the SEC complaint, Musk allegedly chose to set the share price at $420 because he had "recently learned about the number's significance in marijuana culture and thought his girlfriend "would find it amusing, which admittedly is not a great reason to pick a price".

The SEC case, filed in NY this afternoon, alleges the Tesla billionaire made "false and misleading statements" in his now infamous 7 August tweet.

Tesla's stock price increased by more than 6% from the time of Mr Musk's first tweet until the close of trading on 7 August and closed up 10.98% from the previous day, the regulator said.

This is a breaking news story. "An officer's celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly".

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. The SEC then hastily pulled together a lawsuit.

"The chairman and CEO of a public company has important responsibilities to shareholders", said Stephanie Avakian, co-director of the U.S. Securities and Exchange Commission's Division of Enforcement, at a press briefing.

SETH ROGEN OF TECH Elon Musk is being sued by the Securities Exchange Commission (SEC) over his infamous "Tesla 420" tweet.

Tesla shares later plummeted as several executives quit following a webcast in which the CEO was filmed smoking marijuana and wielding a sword.

"This unjustified action by the SEC leaves me deeply saddened and disappointed", he said in a statement.

Tesla is yet to issue a statement about the SEC's case against Elon Musk.

The statements, the complaint said "were premised on a long series of baseless assumptions and were contrary to facts that Musk knew".

You can read the entire SEC court filing below.

Shares actually traded up briefly in after-hours action, until Musk flipped out in response to questions from two analysts on a conference call.

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