The US Securities and Exchange Commission (SEC) has charged Tesla CEO Elon Musk with securities fraud, stating that his recent tweets about taking the company private were “false and misleading”.
In the tweets, Musk claimed that funding had been secured to take Tesla private at $420 per share – 20% higher than Tesla shares were trading at the time.
The SEC accuses Musk of not having discussed deal terms with any funding partners, where Musk alleged that the only step remaining in the process was putting the move to a shareholder vote.
"He allegedly knew that the potential transaction was uncertain and subject to numerous contingencies," stated the SEC’s complaint. "Musk’s tweets caused Tesla’s stock price to jump by more than 6% on 7 August and led to significant market disruption.”
Musk later went back on the decision to delist the electric car maker, saying: “Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we're better off as a public company.
"Additionally, a number of institutional shareholders have explained that they have internal compliance issues that limit how much they can invest in a private company.”
The SEC aims to have Musk removed from his post at Tesla and barred from serving as an officer or director at a public company. This announcement led to Tesla stock diving 13% to $270, reports Bloomberg.
Steven Peikin, co-director of the SEC’s enforcement division, said: “Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders. An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”
The SEC is holding an ongoing investigation into the findings.
In a statement, Musk said: “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.”
Tesla’s board of directors added: “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.”
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And you?
Nice try with the diversionary tactic but no cigar. No one questions his record. Please point me to where it says that because he's the biggest disruptor he can openly break the rules and mislead investors. Or are you OK with that?
And you?
How many disruptive indusitries did you start? And how many jobs did you create in the process? Let me guess, none...
From PayPal (online payments) to SpaceX (reusable rockets), Tesla (desirable EVs), SolarCity (afordable solar panels), NeuraLink (minded controled hardware), Hyperloop (viable vacum tube high speed pods), OpenAI (open source AI framework) and Boring (tuneling), if he isn't the big disruptor of our generation, please point to me who is?
Market abuse
I can’t comment on SEC regulations, as I haven’t been registered with them since 2002, so my knowledge is out of date. However, in this country what he did would appear to be a very clear case of market abuse. The head of a public company cannot publicly state that he has a funded bid 20% above the market price when this isn’t the case. It doesn’t matter whether the company made electric cars or toothbrushes you are effectively creating a false market which any regulator cannot allow to happen. Tesla have taken a great deal of money from investors to fund their growth and those investors are owed a duty of care by the company and whether they have made or lost money is immaterial to this consideration.
The regulatory regimes are similar in the US and the UK and I think Musk will find the SEC cannot be dismissed as casually as he seems to think.