Culture 3 min read

SEC Files Fraud Case Against Elon Musk, Tesla Might be Next

Kathy Hutchins /

Kathy Hutchins /

The Securities and Exchange Commision has filed a fraud case against Elon Musk, and Tesla might be next.

According to reports, the fraud case against Elon Musk was triggered by tweets made by the Tesla CEO less than two months ago. It should be noted that Musk has been the subject of online attacks following his recent controversial tweets.

Last month, Musk was sued by British diver Vernon Unsworth for his July 15th tweet calling the diver a “pedo guy.” Unsworth was one of the divers who helped rescue the boys’ soccer team that got trapped inside the Tham Luang cave in Thailand.

Back then, people criticized Musk for his unfounded accusations, and his company investors were reportedly not happy with the bad publicity. Many advised the tech billionaire to stay away from Twitter. However, there’s no stopping the man from airing his thoughts through the social networking site.

This time, Musk earned the ire of the Securities and Exchange Commission for a series of tweets concerning Tesla and its alleged privatization. In a lawsuit filed by the agency in a Manhattan federal court yesterday, September 27th, the SEC claimed that Musk issued repeated, misleading statements through a series of tweets which hinted a planned private takeover of Tesla.

A part of the documents filed by SEC reads:

“Musk’s statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote. In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”

The tweets in question were made on August 7th, starting out with Musk saying he’s considering taking his electric car manufacturing company private at $420.

“Neither celebrity status nor a reputation as a technological innovator provides an exemption from the federal securities law,” Stephanie Avakian, co-director of the SEC’s enforcement division, said during a press conference held by the agency.

Specifically, the SEC said in its complaint that Musk didn’t discuss with any potential funding source a share price of $420 for taking Tesla private. He also didn’t contact any shareholders of Tesla to assess the interest in taking Tesla private, nor did he provide Tesla’s Board of Directors a specific proposal to make the car company private.

The SEC is reportedly not just seeking civil penalties, the agency is also after Musk’s positions as CEO and director of Tesla, barring him from serving such positions in the company. Also, unnamed sources said that the SEC is about to file charges against Tesla in the days to come.

Do you believe that the fraud case against Elon Musk could be a damaging blow to the Tesla company?

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Chelle Fuertes

Chelle is the Product Management Lead at INK. She's an experienced SEO professional as well as UX researcher and designer. She enjoys traveling and spending time anywhere near the sea with her family and friends.

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