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Elon Musk Charged with Securities Fraud for Misleading Tweets

Elon Musk Charged with Securities Fraud for Misleading Tweets

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On September 28, 2018, the Securities and Exchange Commission announced that it charged Elon Musk, CEO and Chairman of Silicon Valley-based Tesla Inc., with securities fraud for a series of false and misleading tweets about a potential transaction to take Tesla private.

On August 7, 2018, Musk tweeted to his 22 million Twitter followers that he could take Tesla private at $420 per share (a substantial premium to its trading price at the time), that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote.  The SEC’s complaint alleges that, in truth, Musk had not discussed specific deal terms with any potential financing partners, and he, allegedly, knew that the potential transaction was uncertain and subject to numerous contingencies. According to the SEC’s complaint, Musk’s tweets caused Tesla’s stock price to jump by over six percent on August 7, 2018 and led to significant market disruption.

The SEC’s complaint, filed in federal district court in the Southern District of New York, alleges that Musk violated antifraud provisions of the federal securities laws, and seeks a permanent injunction, disgorgement, civil penalties, and a bar prohibiting Musk from serving as an officer or director of a public company.

Source: SEC.gov

Kehoe Law Firm, P.C.