The Securities and Exchange Commission has opened a case against Tesla and SpaceX CEO Elon Musk.
As first reported by Bloomberg, this case follows a series of scandals around the CEO’s online behavior, ranging from a defamation suit filed by a cave diver after Musk referred to him as a “pedo guy” on Twitter, to tweeting that he had secured funding to take the company private at a $420 share price. The SEC alleges the latter tweets “harmed” some investors and were in violation of the 1934 Securities Exchange Act, and that the price in question was arrived at solely because “[Musk] had recently learned about the number’s significance in marijuana culture.”
In the suit, the penalties the SEC is seeking include that Musk “be prohibited from acting as an officer or director” of a public company and that he “disgorge [...] any ill-gotten gains” that could have resulted from his tweets. The SEC also alleged that Musk “will violate [the Securities Exchange Act] again” if he is not “restrained and enjoined.”
Tesla’s stock dropped by more than ten percent in after-hours trading.
Tesla sent over the following statement, attributed to Elon Musk:
“This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in 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 produced a second statement, which it sent to Gizmodo over four hours later:
Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful US auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees.
The SEC’s own statement to press is available on the agency’s website.
The suit, filed to New York’s Southern District Court today, is available to read in full below: