SEC Charges Musk With Stock Fraud, Want Him Removed From Tesla (NASDAQ:TSLA)
Late Thursday, the US Securities and Exchange Commission (SEC) accused Tesla (NASDAQ:TSLA) COB/CEO Elon Musk, 47 anni, of stock fraud and sought to remove him from his role in charge of the EV company, saying he made a series of “false and misleading” Tweets about taking Tesla private last month in the “420′ transaction.
In the lawsuit, the SEC described Mr. Musk surprising members of his own team and investors with a series of Tweets, starting with the 7 August announcement that he was thinking of taking Tesla private, then 12 mins after the 1st Tweet, Tesla’s head of investor relations texted Mr. Musk’s CoS to ask whether Mr.Musk’s announcement was “legit”, the SEC said.
Elon Musk is the public face of Tesla and losing him would be a big blow for the money-losing car maker which has a market value of more than $50-M, chiefly because of the company’s ‘cult’ investors’ belief in his leadership.
The US Department of Justice (DOJ), which has the authority to press criminal charges, has also questioned the company about Mr. Musk’s Tweets, the company said this month.
Tesla shares is off 11.55% in pre-market trading Friday at: 252/share
The SEC’s lawsuit, filed in Manhattan federal court, caps 2 wild months set in motion on 7 August when Mr. Musk told his more than 22-B Twitter followers that he might take Tesla private at 420/share, with “funding secured”and the stock spiked to 380/share, then quickly faded into Bear territory.
On 24 August after news of the SEC probe had become known, Mr. Musk blogged that his company (he owns about 20%) is staying-public citing investor resistance.
Thursday SEC filed the lawsuit after a proposed settlement with Mr. Musk fell apart.
The SEC did not immediately respond to a request for comment late on Thursday.
In its lawsuit, the SEC said Musk calculated the 420/share based on a 20%premium over that day’s closing share price and because of the 420 number’s slang reference to marijuana.
The lawsuit, which cites e-Mails and text messages between Mr. Musk and Tesla executives, quoted him as saying he thought his girlfriend, performance artist ‘Grimes’ “would find it funny, which admittedly is not a great reason to pick a price.”
HeffX-LTN’s overall outlook on Tesla prior to learning about the SEC’s action was Neutral to Bearish