WASHINGTON, Sept 28, 2018 (BSS/AFP) – The US Securities and Exchange
Commission on Thursday charged Tesla CEO Elon Musk with securities fraud,
alleging he misled investors last month in tweets about taking the company
private.
Musk tweeted August 7 that he had “funding secured” to privatize the
electric automaker at $420 a share, causing a brief spike in Tesla’s share
price.
The SEC said Musk’s statements on Twitter were “false and misleading” and
that he had never discussed the plans with company officials or potential
funders.
Musk later said he later decided against the plan.
But Musk quickly rejected the SEC’s allegations on Thursday, calling the
charges baseless and vowing to defend himself.
“This unjustified action by the SEC leaves me deeply saddened and
disappointed,” Musk said in a statement.
“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.”
Tesla expressed support for Musk on Thursday, saying the company and the
board of directors “are fully confident in Elon, his integrity, and his
leadership.”
The SEC’s charges pose a potentially devastating threat to Musk’s future
as an entrepreneur, as the agency is seeking fines and the return of ill-
gotten gains, as well as potentially barring him from ever serving as an
officer or board member of a publicly-traded company.
– ‘As firm as it gets’ –
Stephanie Avakian, the SEC’s co-director of enforcement, told reporters
that Musk knew his statements lacked any basis in fact.
The Tesla CEO “had not even discussed key deal terms, including price with
any potential source of funding,” she said at a news conference.
The charges were a fresh blow to the embattled silicon valley entrepreneur
and his company, which has been buffeted in recent months, struggling to
reach production targets.
Musk has baffled investors with emotional and seemingly erratic media
appearances, including one where he appeared to smoke marijuana, and a public
battle with a rescuer who helped save a group of boys trapped in a cave in
Thailand.
Steven Peikin, SEC co-director of enforcement, told reporters Thursday
that Tesla’s investor relations department had scrambled to contain the
fallout from Musk’s tweets, falsely assuring investors the matter was
effectively a done deal.
“The investor relations department told analysts that there was a quote
firm offer, and that quote — the offer is as firm as it gets,” Peikin said.
Tesla’s share price closed up nearly 11 percent the day of the tweet —
which caused the Nasdaq to suspend trading for an hour and a half.
The company’s fortunes on Wall Street worsened considerably Thursday,
sinking about 10 percent in after-hours trading to $277.50, down 25 percent
since the day of the go-private tweet.