SEC sue Musk for fraud, seek to remove him from Tesla

SEC sue Musk for fraud, seek to remove him from Tesla

SEC sue Musk for fraud, seek to remove him from Tesla

The US Securities and Exchange Commission on Thursday charged Tesla CEO Elon Musk with securities fraud, alleging he misled investors last month in tweets about taking the company private.

The SEC sent subpoenas to Tesla in August after the sometimes erratic Musk sent a series of tweets Aug. 7 saying he was considering taking the company private at $420 U.S. per share.

The SEC does not have criminal enforcement power.

After Musk said "funding secured" in his now infamous tweet, there was plenty of confusion about which entities had supplied this funding. "Integrity is the most important value in my life and the facts will show I never compromised this in any way".

The SEC said Musk met for less than an hour with three representatives of Public Investment Fund, at the company's Fremont, California, plant on July 31 during which the lead representative for the Saudi Arabian sovereign wealth fund expressed interest in taking Tesla private if the terms were "reasonable", according to the lawsuit.

Tesla was not immediately available for comment.

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In its complaint, the regulator says Mr Musk made a series of "false and misleading" tweets and he "knew or was reckless in not knowing" that he was misleading investors.

Tesla issued a response from Musk via email. As evidence, the complaint notes that within minutes of the first tweet, the head of investor relations at Tesla texted Musk asking if the tweet was legitimate.

The company's fortunes on Wall Street worsened considerably as of Thursday, sinking about 10 percent in after-hours trading to $$277.50, down 25 percent since the day of the tweet. Six of Tesla's directors released a statement expressing support for Musk and the need to focus on "ensuring Tesla's operational success".

The suit seeks an order from a judge barring Musk from serving as an officer or director of a public company, a request often made in SEC lawsuits, as well as unspecified monetary penalties.

Shares of Tesla are swapping hands at right around $310 this morning.

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