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A Tesla investor sued Elon Musk and the company’s board of directors, claiming that the CEO’s “erratic” tweets violated an agreement with the United States Securities and Exchange Commission.
What happened: Investor Chase Gharrity filed a lawsuit in Delaware Chancery Court alleging that Tesla Inc (NASDAQ: TSLA) Musk continues to send “erratic tweets” in violation of an agreement with the United States Securities and Exchange Commission.
Lawsuit accuses Tesla board of not controlling Musk for sending tweets, even after SEC directives, causing company “substantial damage” including billions of dollars in lost market capitalization , Reuters reported.
“Musk’s misconduct” and “Tesla’s board of directors’ inability to ensure compliance” have “caused substantial damage” to the company, the lawsuit said.
The lawsuit was originally filed on March 8.
Why is this important: The lawsuit cited Musk’s tweet in May 2020 in which he mentioned that “Tesla’s stock is too high” resulting in a loss of over $ 13 billion in Tesla’s market value.
In 2018, Musk had to settle with the SEC after tweeting that he would take Tesla private in a $ 72 billion deal. The SEC accused Musk of committing securities fraud.
Then Musk and Tesla agreed to pay $ 20 million each in the settlement. Under the deal, Tesla was tasked with following monitoring procedures related to Musk’s social media posts, including his tweets.
The SEC has not publicly accused Musk of recent violations, Reuters noted, and Tesla’s share price has soared in the past 12 months by 534.59% to $ 693.73, helping to fuel the growth of ETFs holding Tesla shares, such as ETF ARK Innovation (NYSE: ARKK).
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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