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Tesla CEO Elon Musk Charged With Securities Fraud By US Regulators Over 'Misleading' Tweet

DIVYIA ASTHANA | 0
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| September 28 , 2018 , 10:36 IST

The US Securities and Exchange Commission (SEC) said on Thursday that it has charged Tesla CEO Elon Musk with securities fraud, alleging that Musk misled investors last month in a series of tweets about taking the electric car company Tesla private. Among other things, the SEC is seeking to bar Musk from serving as an officer or director of a publicly traded company if he is found guilty in the case.

Stephanie Avakian, co-director of the SEC's division of enforcement, during a press conference on Thursday emphasised that the CEO of a public company has to be careful about making comments publically.  

"A chairman and CEO of a public company has important responsibilities to shareholders," she said.

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"Those responsibilities include the need to be scrupulous and careful about the truth and accuracy of statements made to the investing public, whether those statements are made in traditional forms such as a press release or an earnings call or through less formal methods such as Twitter or other social media," Avakian said.

The Tesla CEO “had not even discussed key deal terms, including price with any potential source of funding,” she said.

"Neither celebrity status nor reputation as a technological innovator provide an exemption from the federal securities laws," she said.

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After the charges were levelled against Musk by the SEC, he denied the allegations calling them unjustified.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said in a statement.

“I have always taken action in the 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,” he said.

On August 7, Musk tweeted from his personal handle, "Am considering taking Tesla private at $420. Funding secured."

The tweet resulted in a brief spike in Tesla's share price, however, on August 25 in a tweet from the official handle of Tesla, Musk confirmed that the company would remain public and that he had decided against going the private route.