SEC sues Elon Musk for his tweet about taking Tesla private

The commission is asking the court for an order that would stop Musk from being "an officer or director" of any public company.

According to the SEC's complaint, Musk's tweets caused Tesla's stock price to jump by over six percent on August 7, and led to significant market disruption.

Explaining the tweet, Musk said he understood Saudi Arabia's sovereign wealth was prepared to provide funding to take the company private at a proposed price of close to $420 per share.

Moreover, his boast that the transaction was certain if it could pass a shareholder vote was also false, the SEC stated in its filing: "He also knew that he had not satisfied numerous additional contingencies, the resolution of which was highly uncertain" when he made that statement.

'Last month, following Elon's announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it.

'This unjustified action by the SEC leaves me deeply saddened and disappointed, ' Musk said.

Tesla's stock dropped more than 10% in after-hours trading. "I have always taken action in the best interests of truth, transparency and investors".

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The SEC wants to bar Musk from being CEO of a public company. Losing its public face and guiding force would be a big blow for money-losing Tesla, which has a market value of more than $50 billion, chiefly because of investors' belief in Musk's leadership.

Many believe Musk's tweets were likely to be weighed against the Reed Hastings Rule, which was established in 2012.

Even before the tweets, the SEC was investigating issues at Tesla including its auto sales projections. After Stephanie Avakian and Steven Peikin recapped the details of the lawsuit (tl;dr: Musk lied, and he shouldn't be able to get away with it), they briefly answered questions from reporters.

Tesla was not immediately available for comment following the SEC's lawsuit.

The next day, Musk tweeted from his cell phone: "Am considering taking Tesla private at $420". But at the meeting, there was no discussion of a dollar amount or ownership stake for the fund, nor was there discussion of a premium to be paid to Tesla shareholders, the complaint said.

Musk did, however, begin emailing on August 2 about the potential of such a transaction within Tesla. "Yeah, that would be great", Musk responded.

However, Ms Toledano told Business Insider it was Mr Musk himself who suggested putting the employees on the safety team, and said she simply agreed to the proposal. "Will send you shortly'".

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