SEC sues Elon Musk over tweet, seeking his ouster from Tesla

SEC sues Elon Musk over tweet, seeking his ouster from Tesla

SEC sues Elon Musk over tweet, seeking his ouster from Tesla

Musk has long used Twitter to criticize short-sellers betting against his company, and already faced several investor lawsuits over the August 7 tweets, which caused Tesla's share price to gyrate. More seriously for Musk, and Tesla, they can ban a director from serving as an officer in a public company - a measure they are pursuing against Musk. Instead, drama surrounding Musk is once again taking center stage.

Shares were last down 12.5 per cent at US$268.93 in trading before the bell in NY, which would wipe more than US$6 billion off Tesla's market value. The company's 5.3% bonds declined 1.49 cents to 84.81 cents on the dollar, according to Trace bond price data.

The offer, according to CNBC, which first reported on the proposed deal, would have also forced Tesla to appoint two independent board members.

Musk posted the "funding secured" tweet amid a war of words with Tesla short sellers. The company confirmed earlier this month said that the Department of Justice is carrying out its own criminal investigation.

He said the share price is now "more faith-based" than rooted in the company's financial performance.

At the time of writing, Tesla shares are trading at US$268.20 ($369.55), a significant drop from US$342.54 ($471.99) before this whole affair started.

Musk was uncharacteristically silent on Twitter Thursday, but said in an emailed statement that "this unjustified action by the SEC leaves me deeply saddened and disappointed". Johnson believes Musk's ability to inspire investors with a vision of a brighter future has blinded them to the "horrendous" fundamentals at Tesla. The company itself wasn't targeted in the lawsuit.

Steven Peikin, co-director of the SEC's enforcement division, said "corporate officers hold positions of trust in our markets and have important responsibilities to shareholders".

That, in turn, could make it more hard to raise more money to stay alive, particularly in the coming months, with $1.3 billion in debt payments coming due by early next year. "If Mr. Musk ends up staying on, the reputational harm from this might still prevent the stock from immediately returning to 'normal'". "I think the SEC lawsuit has scared people".

Analysts and experts told CNN the SEC lawsuit brings a scourge of uncertainties to Tesla (TSLA), which is already grappling with intense business pressure. "They want to make an example out of him".

At Friday's close, GM had a market capitalization of about $47.5 billion, according to Bloomberg data, while Tesla's was down to $45.17 billion. Musk traditionally has had little trouble raising money on Wall Street.

Tesla has struggled to hit its targets for months and is rapidly burning through cash. "Investors are concerned that this is just the beginning and there is a "black box" of outcomes from here". "Personally, I think it would be very unsafe to do so".

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