US regulators charge Tesla CEO Elon Musk with fraud
GETTY/AFP / MARIO TAMA
Tesla CEO Elon Musk gave
'false and misleading' statements, according to the SEC, which has
charge him with fraud and is seeking to bar him from serving as an
official of a publicly-traded company
The US Securities and Exchange Commission on Thursday
charged Tesla CEO Elon Musk with securities fraud, alleging he had
misled investors last month in tweets about taking the company private.Musk tweeted August 7 that he had "funding secured" to privatize the electric automaker at $420 a share, causing a brief spike in Tesla's share price.
Musk later said he later decided against the plan.
But Musk quickly rejected the SEC's allegations on Thursday, calling the charges baseless and vowing to defend himself.
"This unjustified action by the SEC leaves me deeply saddened and disappointed," Musk said in a statement.
"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's charges pose a potentially devastating threat to Musk's future as an entrepreneur, as the agency is seeking fines and the return of ill-gotten gains, as well as potentially barring him from ever serving as an officer or board member of a publicly-traded company.
- 'As firm as it gets' -
But Stephanie Avakian, the SEC's co-director of enforcement, told reporters that Musk knew his statements lacked any basis in fact.
AFP / SAUL LOEB
Tesla shares took a beating in after hours trading once the SEC charges were announced
The charges were a fresh blow to the embattled silicon valley entrepreneur and his company, which has been buffeted in recent months, struggling to reach production targets.
Steven Peikin, SEC co-director of enforcement, told reporters Thursday that Tesla's investor relations department had scrambled to contain the fallout from Musk's tweets, falsely assuring investors the matter was effectively a done deal.
"The investor relations department told analysts that there was a quote firm offer, and that quote -- the offer is as firm as it gets," Peikin said.
Tesla's share price closed up nearly 11 percent the day of the tweet -- which caused the Nasdaq to suspend trading for an hour and a half.
The company's fortunes on Wall Street worsened considerably Thursday, sinking about 10 percent in after-hours trading to $277.50, down 25 percent since the day of the go-private tweet.
US regulators charge Tesla CEO Elon Musk with fraud
GETTY/AFP / MARIO TAMA
Tesla CEO Elon Musk gave
'false and misleading' statements, according to the SEC, which has
charge him with fraud and is seeking to bar him from serving as an
official of a publicly-traded company
Musk tweeted August 7 that he had "secured" funding to privatize the electric automaker at $420 a share, causing a brief spike in Tesla's share price.
Musk later said he later decided against the plan.
The charges were a fresh blow to Musk and Tesla, which have also been buffeted in recent months as the company struggled to reach production targets and Musk gave emotional comments to the media, including one interview where he appeared to smoke marijuana.
Musk "knew that he had never discussed a going-private transaction at $420 per share with any potential funding source," the SEC said in a complaint filed in federal court in New York.
Tesla's share price closed up nearly 11 percent that day as a result of Musk's tweet.
The SEC said it is seeking to bar Musk from serving as an official of any publicly-traded company, in addition to fines to be determined by a court.
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.
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