Elon Musk accused of fraud over Tesla tweets

  • 28/09/2018
Elon Musk and his girlfriend, pop star Grimes.
Elon Musk and his girlfriend, pop star Grimes. Photo credit: Getty

US securities regulators have accused Tesla chief executive Elon Musk of fraud and sought to ban him as an officer of a public company.

They say he made a series of "false and misleading" tweets about potentially taking the electric car company private last month.

The Securities and Exchange Commission's (SEC) lawsuit, filed in Manhattan federal court, comes less than two months after Mr Musk told his more than 22 million Twitter followers on August 7 that he might take Tesla private at US$420 per share, and that there was "funding secured".

"Neither celebrity status nor reputation as a technological innovator provides an exemption from federal securities laws," Stephanie Avakian, co-director of enforcement at the SEC, told a news conference announcing its charges against Mr Musk.

Mr Musk has long used Twitter to criticise short-sellers betting against his company, and already faced several investor lawsuits over the August 7 tweets, which caused Tesla's share price to gyrate.

According to the SEC, Mr Musk "knew or was reckless in not knowing" that his tweets about taking Tesla private at US$420 a share were false and misleading, given that he had never discussed such a transaction with any funding source.

The SEC said he also knew he had not satisfied other contingencies when he declared unequivocally that only a shareholder vote would be needed.

Thursday's complaint also seeks to impose a civil fine and other remedies. The SEC does not have criminal enforcement power.

On August 24, after news of the SEC probe had become known, Mr Musk blogged that Tesla would remain public, citing investor resistance.