SEC sues Tesla CEO Musk, alleges fraud over tweets

NEW YORK (Reuters) - The U.S. Securities and Exchange Commission on Thursday sued Tesla Inc (TSLA.O) 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.

FILE PHOTO: Tesla Motors CEO Elon Musk reveals the Tesla Energy Powerwall Home Battery during an event in Hawthorne, California, U.S., April 30, 2015. REUTERS/Patrick T. Fallon/File Photo

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.”

FILE PHOTO: A Tesla charging station is seen in Salt Lake City, Utah, U.S. September 28, 2017. REUTERS/Lucy Nicholson

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.

Reporting by Jonathan Stempel in New York; Editing by Bill Rigby and Lisa Shumaker

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(Original source)