Elon Musk at Tesla Model 3 reveal
Federal regulators said Thursday that Tesla CEO Elon Musk intentionally misled investors last month when he tweeted that he had “funding secured” to buy back millions of dollars in shares. The Securities and Exchange Commission additionally asked a judge to bar Musk from running the automaker.
The lawsuit by the SEC was filed in a federal district court in New York.
In the 23-page allegation, the SEC lays out its case that while Musk had met with representatives from the Saudi Arabian sovereign wealth fund beginning in 2017, Musk’s tweets on Aug. 7 were baseless and false.
“In truth and in fact,Musk had not even discussed, muchless confirmed, key deal terms, including price, with any potential funding sourceIn truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the lawsuit alleges.
A representative from Tesla did not immediately comment on the lawsuit. Tesla is not named in the lawsuit, although Musk has made statements through Tesla’s public relations staff before. Musk has not responded on Twitter to the lawsuit.
The lawsuit says that Musk met with representatives from the fund on July 31, and discussed how the company could be taken private, although no commitments were made and no numbers were discussed.
The detailed allegations filed by regulators say that Musk notified Tesla’s board of directors about the proposed bid days before his tweet, although he didn’t include any price or plans for taking the company private. In the lawsuit, Musk acknowledged that his price of $420 per share was roughly 20 percent over the closing price of Tesla stock, which would have been $419. Musk said that he rounded the number up to $420 after learning the significance of the number in marijuana culture.
Later, after the Aug. 7 tweet, Musk did not clarify his statements to investors, regulators, or the press. The lawsuit specifies texts and emails Musk received from the press, and his own staff, to clarify his statements.
On Aug. 24, Musk and the board publicly announced that the automaker would abandon its bid to go private.
The lawsuit seeks an unspecified amount from Musk for investors who may have been bilked by the tweets, and seeks to bar Musk from running a publicly traded company. Tesla has been a publicly traded company since 2010.
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