The United States Securities and Exchange Commission on Thursday sued Tesla’s Chief Executive Officer Elon Musk for a series of “false and misleading” tweets in August, reported CNN. The complaint is related to Musk’s tweets that proposed to take the company private, claiming he had secured funding.
The markets regulator said Musk had not secured the funding. “In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the regulator said in its complaint. The complaint alleged that Musk’s tweets caused Tesla’s stock price to jump by over 6% on August 7, and led to market disruption.
In a lawsuit filed in a court in New York, the Securities and Exchange Commission accused Musk of committing fraud by making false public statements with the potential to hurt investors, according to a statement.
The suit seeks to bar Musk, who is also Tesla’s chairperson, from serving as an executive or director of publicly-traded companies.
“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said in a statement, according to CNN. “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.”
Tesla and its board of directors said in a joint statement that they are “are fully confident in Elon, his integrity, and his leadership of the company”.
Steven Peikin, co-director of SEC’s Enforcement Division, said a person’s “celebrity status or reputation as a technological innovator” does not give them the right to take responsibilities to shareholders lightly.
Weeks after Musk’s tweets on taking the company private, Musk announced that the company would continue to be publicly traded. Musk said he had received feedback indicating that most of Tesla’s existing shareholders believed that Tesla is better off as a public company. After his initial announcement, two investors had sued him and Tesla for allegedly manipulating the company’s share prices through false and misleading tweets.