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The People vs. Elon Musk: Tesla CEO Charged with Fraud by SEC

Doing business on Twitter, especially when your company is publicly listed, is all fun and games. At least until the  Securities and Exchange Commission (SEC) gets wind of it and starts an investigation.
Elon Musk taken to court by the SEC 1 photo
Photo: CNBC.com
According to a report by CNBC, citing a court filing in the Manhattan District Court, the securities watchdog is charging the Tesla CEO with fraud following the now infamous August tweets that announced plans to go private again.

The official court filing, which you can find attached below, states as follows.

The Commission brings this action against Musk pursuant to Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] to enjoin the transactions, acts, practices, and courses of business alleged in this Complaint and to seek orders of disgorgement, along with prejudgment interest, civil penalties, and an officer and director bar against Musk, and such further relief as the Court may deem appropriate.”

Musk tweeted back in August that he considers taking Tesla private, following several meetings with representatives from the Saudi Arabian sovereign wealth fund that lead to him being under the impression that the Saudis would financially back such a move.

At the time, he tried to justify his tweet by explaining how representatives from the fund – already holding a sizeable stake in Tesla - have been pushing him to take the company private for almost two years, promising to provide the needed funds.

His comments caused the market to react and the SEC to step in and investigate possible manipulation of the market price of the stock. Since then, Musk did a 180 on his comments, but this hasn't stopped the investigation from going forward.

As a result of the lawsuit becoming public knowledge, Tesla stock dropped by nearly 10 percent in extended trading Thursday.

We'll get back on this story as new developments emerge, so stay tuned throughout the day.
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 Download: SEC Elon Musk court filing (PDF)

About the author: Daniel Patrascu
Daniel Patrascu profile photo

Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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