Tesla, Elon Musk Charged With Fraud by the SEC
Tesla and Elon Musk have been charged with fraud by the Securities and Exchange Commission.
As first reported by Bloomberg, the SEC decided to sue Tesla and Musk in Manhattan Federal Court, with shares of the American electric vehicle maker falling six percent on the NASDAQ during after hours. The commission alleges Musk committed Musk securities fraud.
SEE ALSO: Lucid Motors Secures $1B in Funding From Saudi Arabia
The SEC opened an investigation into Tesla and Musk after the 47-year old tweeted he was taking Tesla private at $420 a share and that the funding had already been secured. Tesla later admitted the funding hadn’t been completely secured, but that Musk had talked about funding for the transaction with Saudi Arabia’s sovereign wealth fund in late July.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
The SEC complaint said Musk’s tweet “created the misleading impression that taking Tesla private was subject only to Mr Musk choosing to do so and a shareholder vote.”
It went on to say that “in truth and in fact Musk had not even discussed much less confirmed key deal terms, including price, with any potential funding source.”
The SEC also alleges that Musk came to the $420 share price by “assuming 20 percent premium over Tesla’s then existing share price then rounding up to $420 because of the significance of that number in marijuana culture.” Musk allegedly held the belief that his musician girlfriend Grimes would find the reference humorous.
In an emailed response to Bloomberg, Musk called the actions of the SEC “unjustified” and said its actions have left him “deeply saddened and disappointed.”
“I have always taken action in the best interests of truth, transparency and investors,” he said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
Saudi Arabia’s sovereign wealth fund recently invested in fledgling Tesla competitor Lucid Motors, giving the EV startup a $1 billion cash injection so it can begin to produce the first examples of its electric luxury sedan, the Lucid Air.
[Source: Bloomberg]
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