Tesla CEO Elon Musk Sued by U.S. Government Over ‘Funding Secured’ Tweet

Tesla CEO Elon Musk has been sued by the U.S. Security and Exchange Commission (SEC) for securities fraud, reports Bloomberg:

Elon Musk was accused by the Securities and Exchange Commission of misleading investors when he tweeted that he had funding lined up to take Tesla Inc. private.

The SEC’s allegation, contained in a lawsuit filed fewer than two months after the Tesla CEO’s tweet, sent the company’s shares down more than 11 percent in after-hours trading. It sought unspecified monetary penalties and added a market-rattling request — that a judge bar Musk from serving as an officer or director of a public company.

Last month, Musk’s tweet “Am considering taking Tesla private at $420. Funding secured,” triggered a firestorm, sending the stock price soaring.

According to the SEC, they allege Musk made up his claim and the $420 share price point was to impress his girlfriend:

The agency said Musk fabricated the claim in his August tweet that he had “funding secured,” which immediately sent Tesla shares soaring. After calculating a price for taking the company private, the SEC said Musk rounded up to $420 — a reference to “marijuana culture” that, according to the agency, he used because he thought his girlfriend would find it humorous.

Musk responded to the SEC allegations by telling CNBC in a statement “This unjustified action by the SEC leaves me deeply saddened and disappointed,” further adding “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.”

In after-hours trading, shares of Tesla have dropped by as much as 12 percent.