Tesla’s chief executive Elon Musk is facing a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) on Thursday. The SEC accused him of fraud after Musk tweeted that he had secured funding for taking Tesla private at $420 per share.
The SEC stated in the lawsuit filed in a federal court in Manhattan that the executive had made "false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors", though Musk described the accusation as unjustified.
The worst case scenario for the Tesla CEO is that he could be ordered to pay a huge fine and prohibited from running any public company in the U.S. That could also mean his days as Tesla’s chief executive are numbered, though we will likely know more as the case progresses.
Following Musk's tweet on August 7, Tesla's share prices declined after it was found that the executive did not have funding to actually take the company private. Eventually, Tesla's shares fell to $263.24 by September 7 before recovering again.
The lawsuit facing Musk adds to the already growing troubles riling the company such as the delay to the Model 3 production and a fatal crash involving its self-driving car, among others. Last month, Musk also announced his plan to keep Tesla public following growing investor concerns over his intentions to take the company private.
Source: The San Diego Union - Tribune