Elon Musk’s penchant for renegade tweeting has gotten him into trouble with the Securities and Exchange Commission, sending the stock plunging by around 14% to $264.77 per share Friday.
On Thursday the SEC charged the Tesla (TSLA, Financial) CEO and chairman with securities fraud for “a series of false and misleading tweets” he made in August about taking the company private. At the time, Musk said he had secured funding for a sale at $420 per share and lacked only approval of shareholders to move forward on the plan. But the SEC believes Musk never discussed detail of a deal with a potential financing partner and knew a transaction “was uncertain and subject to numerous contingencies.”
Musk’s tweets sent the stock up more than 6% on Aug. 7 and led to “significant market disruption,” the SEC said.
“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” said Steven Peikin, co-director of the SEC’s Enforcement Division. “An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”
The SEC is seeking various penalties against Musk and banning him from serving as an officer or director on any public company, placing the future of Tesla in question.
A week after the tweets, Tesla assembled a special committee to explore a potential privatization transaction “in connection” with Musk’s announcement. The effort ended on Aug. 24 after Musk told them he had changed his mind about going private. In a release, the company said it would “fully support” Musk as the leader of the company going forward.
Musk almost settled with the SEC in a deal that would have required him to temporarily forfeit certain leadership positions at Tesla but may fight the charges in court, Reuters reported per sources.
