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The US Securities and Exchange Commission on Thursday continued Tesla's CEO (TSLA), Elon Musk, about his now infamous tweet stating that he was thinking about privatizing the company and a "secure" financing. The newly-rallying TSLA fell 11% to about $ 275 after the end of the market trading.
"This case involves a series of false and misleading statements by Elon Musk … on August 7, 2018 regarding the taking of Tesla, a publicly traded, private company," agency lawyers wrote in a statement. court documents filed with the US District Court. New York.
The SEC alleged that Musk had misrepresented Twitter, misleading the investors. "Musk's statements, spread via Twitter, incorrectly stated that, if that was his choice, he was almost certain to be able to take Tesla at a purchase price reflecting a substantial premium over Tesla's current price. $ -billions of dollars had been secured and the only eventuality was a shareholder vote, "wrote the agency.
"We claim that Musk's statements were false and misleading," said a SEC official at a news conference. "The SEC is seeking to find that Musk has committed securities fraud," said the manager. The action also seeks to prohibit Musk from being a director or officer of any publicly traded company.
Another SEC official explained that Musks' "secure financing" tweet, intended or not to manipulate the stock, has disrupted the market. "These misleading statements have caused significant confusion and disruption in the market," added the manager. "Musk's tweets have had a significant impact on the price and volume of Tesla's stock."
The head of the SEC also said the regulator alleges that part of Musk's reasoning to say that the fictional idea of Take-Private was targeted at a price of $ 420 was due to the fact that it was not the case. importance of the date for those who smoke marijuana. "We are alleging that Musk arrived at the price of $ 420 assuming a 20% premium and then rounding up to $ 420," a reference to "marijuana growing" because "it would be funny for his girlfriend".
Musk does not really seem to be clean. In a statement issued by Recode and CNBC, Musk said: "This unjustified action by the SEC leaves me deeply saddened and disappointed, and I have always acted in the best interests of truth, transparency and transparency. investors. "
The SEC's action comes less than two weeks after the US Department of Justice launched a criminal investigation into Musk's "secure financing" tweet. The tweet claimed that Tesla had secured financing for a transaction that would take the private sector electric car companies – news that initially boosted Tesla's stock price from $ 363 to $ 379. But the statement seemed questionable to many legal experts, including former SEC chairman Harvey Pitt. If the funding was not "guaranteed", many legal experts claim that Musk's claims would constitute securities fraud.
If we consider that the tweet was made with the intention of increasing the stock price, the tweet of Musk could be considered a market manipulation. In this case, Musk could be liable for damages to investors who have shorted the shares, and short sellers have already filed lawsuits against Musk and Tesla.
However, only a small number of short sellers covered their positions on the day of the tweet publication. About 2 million shares were bought back, according to S3 Partners, a financial data analysis firm.
This means that Musk may not owe a large sum of money because only the losses realized can be recovered as damages in a lawsuit. "If you have no prejudice, there is nothing to recover," said Thomas Gorman, a partner at the Dorsey & Whitney LLP law firm. "Paper waste will not cut it."
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