The Securities and Exchange Commission is suing Tesla CEO Elon Musk for securities fraud, accusing him of making “false or misleading” statements that caused “significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors”.
On August 7, shortly after noon, Musk had tweeted about potentially taking Tesla private at a price of $420 per share and elaborated on the plan in a series of further tweets over the next few hours. Musk’s public musings set off a trading frenzy during which Tesla’s share price spiked until trading eventually had to be halted for more than 90 minutes. Tesla shares closed at $379.57 that day, up more than 10 percent from the previous day and 6.4 percent from the moment of Musk’s initial tweet.
The weeks after Musk’s controversial tweets remained turbulent at Tesla, with reports of an SEC investigation, the departure of two senior executives and several headline-grabbing appearances of Musk himself causing Tesla’s share price to swing wildly. Tesla shares were down more than 10 percent in pre-market trading on Friday in response to the SEC suit that could result in Musk being barred from ever serving in an officer or director role at a public company again.