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    William Maley

    SEC Sues Elon Musk Over Securities Fraud, Wants Him Barred As CEO

      "Lawsuit Secured"

    The tweet that has become Elon Musk's version of Pandora's Box has brought forth a lawsuit from the Securities and Exchange Commission (SEC). Today, the SEC accused Musk of securities fraud when he tweeted that he had the funding secured to take Tesla private back in August.

    "Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions," the SEC wrote in a complaint filed in Manhattan federal court today. 

    "Musk's false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla's stock and resulting harm to investors."

    In the complaint, the SEC says the $420 share price was "based on a 20% premium over that day's closing share price because he thought 20% was a 'standard premium' in going-private transactions." 

    At the time, that price would have been $419. The complaint goes on to say "Musk stated that he rounded the price up to $420 because he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it funny, which admittedly is not a great reason to pick a price.'"

    The SEC is requesting Musk "be prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act."

    This whole mess began on August 7th with Musk tweeting this,

    This surprised a number of people and brought forth questions as to who would provide the large amount of funding needed for this. About a week later, Musk revealed that Saudi Arabia's Public Investment Fund (PIF) could provide the necessary funding. This was based on discussions with the fund within the past couple of years. But Musk would pull the plug on this a few weeks after announcing it.

    "Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,” Musk wrote in a blog post.

    According to Bloomberg, the SEC was already investigating Tesla for various issues including projection into car sales before Musk made the tweet that brought forth a number of problems. 

    “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,” said Musk in a statement.

    "Neither celebrity status nor a reputation as a technological innovator provide an exemption from the federal securities laws," Stephanie Avakian, co-director of the SEC's Enforcement Division said during a press conference.

    Source: Bloomberg (Subscription Required), Roadshow, SEC (Link to the complaint)



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    Tesla while having bright ideas, is not a process individual and at this point, would be in Tesla's best interest to dump him. His TWEETS like any leader are an emotional outburst of stupidity. Social media should not be used by those entrusted to lead be is private and public businesses or any other form of leadership. These people MUST hold themselves to a higher standard due to the leadership entrusted into them and resulting chaos / destruction they can cause that can have huge ramifications on people around the world.

    Stockholders of Tesla should be demanding his removal. He has shown himself to be unfit for his role. I agree with the SEC on this.

    12 hours ago, smk4565 said:

    He should take Tesla private just out of spite now.  

    Will not happen, no one is willing to bankroll this mess of a company with that high of debt.

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    He owns like 20% of the company, he just has to find some big money group to buy up another 30% and he can probably buy up some more shares himself.  He could take control of it if he really wanted to, but I think that would slow their growth and limit their ability to raise money.

     

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    Tesla has LOST 21 Billion in market cap from its peak (and with the stock market at it's historical high).

    Where is the company's 'growth', exactly?

    Edited by balthazar
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