UPDATE: Sept. 27, 2018, 2:24 p.m. PDT The U.S. Securities and Exchange Commission held a press conference Thursday afternoon after filing a suit against Elon Musk. More details about the suit and a statement from Musk have been included in the article below.
Tesla CEO Elon Musk is feeling the heat for a tweet he posted last month. The U.S. Securities and Exchange Commission filed a suit against him Thursday in U.S. District Court in the Southern District of New York for securities fraud.
The tweet that led to all this was Musk mulling buying out his publicly traded electric car company. He said he had “funding secured.”
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
The tweet set off the stock — which wasn’t at $420 yet — and sent shareholders, Tesla owners, the company, and the media into a tizzy. Musk seemed to be serious about taking Tesla private with a company-wide email and public posts about his plan, but then in late August he called it all off.
In the SEC complaint, the SEC alleges that Musk’s “funding secured” tweet was “false and misleading,” as were his following tweets later that same day.
The complaint goes on that Musk’s tweets caused “significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors.”
At a Thursday press conference SEC officials said many investors took the tweet — which many thought was a joke because of the marijuana reference with the $420 stock price — “at face value.”
Musk said in an email statement after the SEC press conference he was “saddened and disappointed.”
He wrote, “This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
The SEC wants to prohibit Musk from serving as an officer or director of a public company.
Separately, Tesla could face criminal charges for the tweet. Tesla said the U.S. Department of Justice had requested documents for the same “funding secured” tweet.
In light of the suit, Tesla and its board of directors issued a joint statement in support of Musk.
“Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful US auto company in over a century,” the statement reads.
“Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees.”
The SEC lawsuit comes after the British cave diver that Musk insulted over Twitter sued the billionaire.
UPDATE: Sept. 27, 2018, 6:08 p.m. PDT The Wall Street Journal reports Musk’s lawyers called off a settlement deal offered by the SEC Thursday morning. So the SEC went ahead with filing a complaint against Musk.
According to the WSJ the SEC “rushed to pull together the complaint” that was filed Thursday afternoon.