BUSINESS
09/27/2018 04:27 pm ET Updated Sep 27, 2018

Elon Musk Is Being Sued By The Securities And Exchange Commission

The lawsuit was filed Thursday.

NEW YORK, Sept 27 (Reuters) - The U.S. Securities and Exchange Commission on Thursday sued Tesla Inc Chief Executive Elon Musk, accusing him of securities fraud for making a series of “false and misleading” tweets about potentially taking the electric car company private.

In a complaint filed in Manhattan federal court, the SEC said Musk “knew or was reckless in not knowing” that he was misleading investors on Aug. 7 by telling his more than 22 million Twitter followers that he might take Tesla private at $420 per share, and that there was “funding secured.”

The complaint also faults subsequent tweets in which Musk said “investor support is confirmed,” and that a “special purpose fund” might be created for investors who stick with the Palo Alto, California-based company.

Tesla was not immediately available for comment. Its shares fell 5.7 percent in after-hours trading.

Thursday’s lawsuit makes Musk one of the highest-profile executives to be accused by the SEC of securities fraud.

It also seeks to bar him from running public companies, which would include Tesla, as well as a civil fine.

The SEC does not have criminal enforcement power.

Musk has long used Twitter to criticize short-sellers betting against his company, and several investor lawsuits have been filed against him and Tesla over the tweets.

On Aug. 24, after news of the SEC probe had become known, Musk blogged that Tesla would remain public, citing investor resistance.

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