Elon Musk accused of securities fraud

US SEC seeks ban on Musk serving as an officer or director of any public company

Elon Musk has been sued by the SEC over alleged securities fraud relating to Tesla Inc.
(Image credit: 2018 Getty Image)

Tesla chief Elon Musk has been accused of securities fraud by the US Securities and Exchange Commission (SEC), stemming from a Twitter message to his 22.5 million followers in early August relating to the electric vehicle company.

The SEC lawsuit follows two other lawsuits brought by investors over the same incident, lodged in mid-August.

Bloomberg reports that the SEC is seeking “unspecified monetary penalties” for misleading investors, adding: “More importantly, [the SEC] will request that a judge bar Musk from serving as an officer or director of a public company”, which could heavily impact his work at the helm of SpaceX and other projects.

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Musk responded to the SEC decision to sue, saying the “unjustified action by the SEC leaves me deeply saddened and disappointed”.

In the tweets, beginning on 8 August this year, Musk made the claim that he was preparing to take Tesla Inc. private, at a price of $420 (£320) per share, and that he had secured funding to make the deal happen.

The August Tweet sent Tesla’s share price soaring by 11%, before dropping back again – and today’s news of the SEC lawsuit has sent Tesla shares tumbling by 13% in after-hours trading.

The lawsuit is the latest blow for Musk, whose increasingly erratic behaviour has rattled investor confidence. Musk recently came under fire for “casually smoking marijuana” on video during comedian Joe Rogan’s podcast, the Washington Post says.

According to the SEC complaint, Musk allegedly decided to set the share price at $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’”.

Complicating things further, Musk is also facing a separate lawsuit from British cave diving expert Vernon Unsworth, who he has publicly and repeatedly accused of being a “child rapist” and a “paedo”, without providing any proof.

When asked for an apology, Musk publicly dared Vernon to sue him, resulting in legal action being launched in the US District Court in Los Angeles, seeking £80,000 in compensatory damages and unspecified punitive damages.

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