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Elon Musk Accused by SEC of Misleading Investors in August Tweet
Tesla Inc. Chief Executive Officer Elon Musk was accused by the Securities and Exchange Commission of misleading investors when he tweeted that he had funding lined up to take the company private.
The agency said Musk fabricated the claim in his August tweet, which sent Tesla shares higher.
"In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source," the SEC said in complaint filed Thursday in Manhattan federal court, less than two months after Musk's tweet.
The suit seeks an order from a judge barring Musk from serving as an officer or director of a public company, a request often made in SEC lawsuits, as well as unspecified monetary penalties.
Shares fell about 10 percent in after-hour trading on news of the lawsuit. The company, which wasn't sued, and an attorney for Musk didn't immediately respond to requests for comment. The SEC has scheduled a press conference for 5 p.m.
The complaint: 1:18-cv-8865 (alt source).
Current (delayed) stock quote: TSLA.
Also at the BBC, TechCrunch, Bloomberg, c|net, and Ars Technica.
[Update: added 20180928_141312 UTC]
The CNBC is reporting Tesla's Musk pulled the plug on a settlement with the SEC at the last minute:
Tesla and the Securities and Exchange Commission were very close to a no-guilt settlement Thursday, reported CNBC's Andrew Ross Sorkin on Friday, citing sources. But, these people say Musk pulled out of the agreement at the last minute.
Under the terms of the deal, Musk and Tesla would have had to pay a nominal fine, and he would not have had to admit any guilt. However, the settlement would have barred Musk as chairman for two years and would require Tesla to appoint two new independent directors, reported CNBC's David Faber, citing sources.
Musk reportedly refused to sign the deal because he felt that by settling he would not be truthful to himself, and he wouldn't have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the sources said.
Tesla was not immediately available for comment.
Musk said Thursday the SEC's allegations are "unjustified" and that he acted in the best interests of investors.
(Score: 2) by All Your Lawn Are Belong To Us on Friday September 28 2018, @05:22PM (1 child)
Commenting on both of the above.... I really do agree with you that people should learn to chill more, have better critical thinking skills, and that Twitter is a hyper-poor medium for communication of... well, anything, but particularly things which affect peoples lives including markets. Your take on the situation was a wise one IMO. And I sympathize with the idea that if one is basing major investment decision based on tweets there should be some level of caveat emptor. Our get-there-first-get-it-now-make-the-most-profit-possible culture causes real damage too as well as having benefits.
Reading the complaint, though, the government alleges two things that make me question the innocence of this.
First, they allege that Musk was in fact pursuing ideas to take the company private and had discussed same with the Tesla Board. So it wasn't like Musk was making something up out of whole cloth, and while 420 is a very steep premium indeed to where Tesla's price was it wasn't on the level of "one billionkajillionfarfillionquinashabalabarillion DOLLARS". Apparently a reporter even sent an email asking him if it was a pot joke or not. While one can speculate all day about motive, maybe he was actually trying to make that deal crystallize by having his Saudi interests read that there was funding already - to prod them to want to get something signed immediately. (If he'd been successful at such a strategy it still might have been not cricket, but probably a lot less bloody).
The other aspect is this 8K filing [tesla.com] where Tesla itself stated that Musk's Twitter pronouncements could be used to announce Tesla material information to the public. An investor thus should be able to rely on it, silly as it was. And the government incorporated that as part of its complaint to establish that this wasn't just Elon Musk saying something off the cuff (even though that carries risk, too).
It is a sad world, though, when there are those who rely on Twitter to understand what the powerful are thinking.
This sig for rent.
(Score: 2) by takyon on Saturday September 29 2018, @04:08AM
I wouldn't count on the situation improving, or people having better critical thinking skills.
Twitter is a medium for information. The design of Twitter might influence (degrade) the quality of the information, but if you are trying to make a quick buck, you probably wouldn't ignore it. And really, what was a misguided tweet became a major news story, because it was "official" and the premise seemed plausible (reefer 😉 to the events that happened in the week or so before the tweet).
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]