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30 May 2024

US regulators charge Tesla CEO Elon Musk with fraud

Tesla Motors CEO Elon Musk (Reuters)


The US Securities and Exchange Commission on Thursday charged Tesla CEO Elon Musk with securities fraud, alleging he misled investors last month in tweets about taking the company private.

Musk tweeted August 7 that he had "secured" funding to privatize the electric automaker at $420 a share, causing a brief spike in Tesla's share price.

The SEC said Musk's statements on Twitter were "false and misleading" and that he had never discussed the plans with company officials or potential funders.

Musk later said he later decided against the plan.

The charges were a fresh blow to Musk and Tesla, which have also been buffeted in recent months as the company struggled to reach production targets and Musk gave emotional comments to the media.

Musk "knew that he had never discussed a going-private transaction at $420 per share with any potential funding source," the SEC said in a complaint filed in federal court in New York.

Tesla's share price closed up nearly 11 percent that day as a result of Musk's tweet.

The SEC said it is seeking to bar Musk from serving as an official of any publicly-traded company, in addition to fines to be determined by a court.

The company's fortunes on Wall Street worsened considerably as of Thursday, sinking about 10 percent in after-hours trading to $$277.50, down 25 percent since the day of the tweet.