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SEC Sues Tesla CEO Musk, Alleges Fraud Over Privatization Plan

Penalties could be severe and affect Musk’s other companies.

by Paul A. Eisenstein on Sep.27, 2018

Tesla CEO Elon Musk is being sued by the SEC, which claims his "plans" to take the company private were "false and misleading."

The Securities and Exchange Commission has sued Tesla CEO Elon Musk, alleging he committed fraud when tweeting and posting about his plans to take the carmaker private last month.

Tesla itself was not named in the suit, though the company has privately given indications it expects to be rolled in later, according to sources. The announcement by the federal agency seriously compounds the problems already facing Tesla and its founder and CEO Musk. They are already being sued by short-sellers who claim the privatization effort was little more than a way to hurt them, resulting in hundreds of millions of dollars in losses.

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In a statement filed in Manhattan District Court, the SEC accused Musk of making “false and misleading statements” to investors when he first tweeted about going private early in August. “In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the complaint adds. (more…)