Tesla CEO, Elon Musk Charged With Securities Fraud For Misleading Tweets


Friday, September 28, 2018   12.31PM / US SEC


The U.S. Securities and Exchange Commission yesterday charged Elon Musk, CEO and Chairman of Silicon Valley-based Tesla Inc., with securities fraud for a series of false and misleading tweets about a potential transaction to take Tesla private.  


On August 7, 2018, Musk tweeted to his 22 million Twitter followers that he could take Tesla private at $420 per share (a substantial premium to its trading price at the time), that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote.  


The SEC’s complaint alleges that, in truth, Musk had not discussed specific deal terms with any potential financing partners, and he allegedly knew that the potential transaction was uncertain and subject to numerous contingencies. According to the SEC’s complaint, Musk’s tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.


“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division.  “An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”  


“Taking care to provide truthful and accurate information is among a CEO’s most critical obligations,” added Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.  “That standard applies with equal force when the communications are made via social media or another non-traditional form.”


The SEC’s complaint, filed in federal district court in the Southern District of New York, alleges that Musk violated antifraud provisions of the federal securities laws, and seeks a permanent injunction, disgorgement, civil penalties, and a bar prohibiting Musk from serving as an officer or director of a public company.  


The SEC’s investigation, which is continuing, was conducted by Walker Newell, and Brent Smyth and supervised by Steven Buchholz, Erin Schneider, and Jina Choi in the San Francisco Regional Office.  The litigation will be led by Cheryl Crumpton and Barrett Atwood.


Related Materials

1.       SEC Complaint

2.       Tesla CEO Elon Musk calls SEC fraud charges an 'unjustified action ...



Proshare Nigeria Pvt. Ltd.



Related News

1.       SEC Lifts Suspension On Heritage Capital Markets Ltd

2.      Conviction Of Nigerian Oil Deal Middlemen Spells Trouble For Shell and Eni On Eve Of Major Trial

3.      Alleged EFCC Officials raid Standard Chartered Bank Head Office

4.      SEC Charges Two Brokers With Defrauding Customers

5.      Whistleblower Accuses AlphaBeta Of Tax Evasion, Money Laundering

6.      MTN Seeks Judicial Intervention, Sues The Attorney General and Central Bank Over $10.1b Demand

7.      Banks, MTN Engage CBN Over $8.1b Fine; Factually Incorrect Premises Highlighted

8.     International Fraud On The Increase – UK Report

9.      Nine FCMB Staff Declared Wanted Over Alleged Multi-Million Naira Customer Deposit Fraud

10.  Who Owns Legacy Shares After $864m Write Off At Ecobank; Post Securities Fraud

11.   Fraudsters May Pose As Brokers Selling Pending IPO or pre-IPO Shares Of Well-known Firms

12.  10 Red Flags That An Unregistered Offering May Be A Scam

13.  Ponzi Scheme - “Red Flags” And How To Spot One



Related News