U.S. Regulators Sue Elon Musk For Fraud, Strives To Bar Him As Director

Photo by OnInnovation via Flickr

On Thursday, the Securities and Exchange Commission of the United States of America accused Elon Musk, the Chief Executive of Tesla Inc, of fraud. It also sought to ban him as a director of a public firm. It said that he made a series of “false and misleading” tweets regarding the possibility of taking the electric car company private.

The complaint was filed in a Manhattan federal court. It makes Musk one of the highest-profile executives to be sued by the SEC over securities fraud.

The indictment came less than two months after Musk informed his over 22 million followers on Twitter on the 7th of August that he is planning to take Tesla private at $420 (321 pounds) per share, and that there was “funding secured.”

Representatives from the company were not immediately available for comment regarding the matter. The shares of Tesla dropped by 5.7 percent in after-hours trading.

Musk has long been utilising Twitter to criticize short-sellers who are betting against his firm. He already faced various investor lawsuits over his tweets last August, which caused the share price of Tesla to gyrate.

The SEC said that Musk “knew or was reckless in not knowing” that the tweets about taking Tesla private at $420 a share were false and misleading, given that he had never talked about such a transaction with any funding source.

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

The complaint that was filed on Thursday also aims to impose a civil fine and other remedies. It also aims to bar him from running public firms, which would include Tesla. The SEC does not possess criminal enforcement powers.

Separately, the billionaire is being sued by a British diver who helped in rescuing the boys who were trapped in a Thai cave after the Tesla CEO called him a paedophile.

According to court documents that were filed in California, Vernon Unsworth says that Musk defamed him with “unlawful, unsupportable and reprehensible accusations.”