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December 15, 2018

Tesla CEO Elon Musk sued by Securities and Exchange Commission for fraud

September 28, 2018
The Securities and Exchange Commission have filed a complaint against SpaceX founder Elon Musk, alleging that he made false and misleading statements about plans to take the company private in August. (Chris Carlson / AP)

Tesla CEO Elon Musk used Twitter to float bogus statements about taking his company private — at a potential financial risk to his investors, a Securities and Exchange Commission lawsuit charged Thursday.

The 23-page Manhattan Federal Court filing alleged that Musk falsely indicated he could take Tesla private at an inflated stock price of $420, had secured funding for the move and was just awaiting a shareholder vote.




“In truth and fact, Musk has not even discussed, much less confirmed, key deal terms,” the lawsuit charged.

Musk said he landed at the price of $420 a share in part as a joke for his girlfriend, referencing the number “420” as used by marijuana smokers, according to court papers. “Admittedly … not a great reason to pick a price,” he acknowledged.

The suit sought to bar Musk from serving as an executive or director of any public company, and sought a return of any “ill-gotten gains” garnered by the boss. The Tesla stock price jumped 6% to $379.57 a share after Musk started tweeting about going private on Aug. 7.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” said Musk in a statement. “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.”

In a statement late Thursday, Tesla and its board of directors aid it’s “fully confident in Elon, his integrity and his leadership of the company, which has resulted in the most successful US auto company in over a century.”

“Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees,” the company said.




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