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Sunday, August 18, 2019

SEC alleges Tesla CEO Musk's Tweets violated federal securities law

Federal Gov

By Marian Johns | Oct 3, 2018

WASHINGTON, D.C. — Tesla Inc. CEO and Chairman Elon Musk, has been charged by the U.S. Securities and Exchange Commission (SEC) with securities fraud, stemming from Tweets regarding taking his company private.

The SEC complaint filed in the Southern District of New York federal court, alleges Musk's Aug. 7, Tweets stating he could take Tesla private at $420 per share and that funding for the transaction has been secured, were false and misleading. According to the SEC, Musk had no discussion about specific deals with potential financing partners and that he knew the potential transaction was uncertain. Musk's Tweets caused his company's stock price to jump more than 6 percent, leading to market disruption, the SEC said. 

“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” SEC Enforcement Division co-director Steven Peikin said in a statement.  “An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.” 

“Taking care to provide truthful and accurate information is among a CEO’s most critical obligations,” added SEC Enforcement Division co-director Stephanie Avakian.  “That standard applies with equal force when the communications are made via social media or another non-traditional form.” 

The SEC accuses Musk of violating anti-fraud provisions of the federal securities law. The commission seeks a permanent injunction, disgorgement, civil penalties and to prohibit Musk from serving as an officer or director of a public company. 

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Tesla, Inc. U.S. Securities and Exchange Commission

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