Tesla CEO Elon Musk is back in news once again and this time, he has been sued by the Securities and Exchange Commission for fraud. The court documents filed by the agency on Thursday alleges that Musk issued “false and misleading” statements and failed to notify regulators of material company events.
On Thursday, the SEC also held a press conference detailing the complaint. In its complaint, the agency only names Elon Musk as a defendant and not the company. According to CNBC, the company was expecting to be named as second defendant besides Elon Musk in the complaint filed by the SEC. The complaint resulted in Tesla shares declining more than 13 percent. The stock is below its 52-week high of $387.46 and has lost roughly 30 percent.
According to court documents, the SEC is seeking to bar Elon Musk from serving as an officer or director of a publicly traded company if found guilty. “A chairman and CEO of a public company has important responsibilities to shareholders and it includes the need to be scrupulous and careful about the truth and accuracy of statements made to the investing public,” Stephanie Avakian, co-director of the SEC’s division of enforcement, said during the press conference.
Elon Musk called the allegations against him as “unjustified” and added that he never compromised his integrity while serving as CEO of Tesla. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way,” Musk said in a statement shared with CNBC.
The complaint filed by SEC is mainly driven by Elon Musk’s tweet in August where he revealed his plan to take Tesla private at $420. He added “Funding Secured” raising questions about his strategy and whether his plans were being detailed to other shareholders.
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Musk later explained that he had discussed the idea of taking Tesla private with the sovereign wealth fund of Saudi Arabia. The complaint filed by SEC alleges that Musk tweeted his plan without discussing them with other Tesla executives. It highlights that Tesla’s own head of Investors Relations sent a text to Musk’s chief of staff asking whether the tweet was legit. Tesla is also being investigated by the Department of Justice for Musk’s tweet on August 7.