Tesla's stock falls 12% after SEC sues Elon Musk

US regulator sues Elon Musk for fraud seek to remove him from Tesla

Tesla's stock falls 12% after SEC sues Elon Musk

The complaint lodged by the SEC in the US District Court in NY alleges that Musk's tweets about taking the company private "were false and misleading because they lacked any basis in fact".

According to the SEC's complaint, Musk had not, in fact, discussed specific deal terms with potential financing partners, and he "allegedly" knew there was uncertainty around the plan.

The SEC's charges pose a potentially devastating threat to Mr Musk's future as an entrepreneur, as the agency is seeking fines and the return of ill-gotten gains, as well as potentially barring him from ever serving as an officer or board member of a publicly-traded company.

Shares of Tesla plunged almost 13 percent to 268.55 in after-hours trading after falling just under 1 percent during regular trading hours.

In the complaint, the SEC claims Musk made a series of "false and misleading statements" about his idea to take the company private.

It was all moonshine, the SEC's legal complaint, filed in NY, alleged: there was no funding, and no real move to take Tesla private, it was claimed. The lead fund representative expresses interest in taking Tesla private, and assures that he is "empowered to make investment decisions for the fund".

Musk did, however, begin emailing on August 2 about the potential of such a transaction within Tesla.

Elon Musk has been accused of making false public statements that had the potential to hurt investors. Musk has said that he posted the go-private tweet while driving to the airport and that no one reviewed it.

The move follows weeks of investigation into the tweet.

Explaining the tweet, Musk said he understood Saudi Arabia's sovereign wealth was prepared to provide funding to take the company private at a proposed price of close to $420 per share.

That brief tweet was enough to send the stock soaring - up by almost 11 percent by the end of the day. "Would it help if [Tesla's head of communications], [Tesla's General Counsel], and I draft a blog post or employee email for you?"

The suit details the unorthodox way (to say the very least) in which the "go-private" proposal was launched, including how Musk came up with the price.

In follow-up tweets to his 22 million Twitter followers, the CEO added: "My hope is *all* current investors remain with Tesla even if we're private". He said Musk could agree to step down as CEO and instead take another title, such as chief production officer. "He also did not inform Nasdaq that he meant to make this public announcement, as Nasdaq rules required". The regulatory body does not have criminal enforcement power. Tesla is not named as the defendant in the SEC complaint and officials refused to comment on matters beyond the complaint filed today.

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