S.E.C. Sues Tesla CEO Elon Musk

The Securities and Exchange Commission filed a lawsuit in New York Federal Court accusing Tesla CEO Elon Musk of committing fraud by making false public statements on Twitter that had the potential to hurt investors, the New York Times reports. The suit aims to bar Musk from serving as an executive or director of publicly traded companies, such as Tesla; this type of punishment is one of the harshest that the S.E.C. can impose on corporate executives. In the Aug. 7 tweet, Musk said he was considering taking Tesla private and that the financing for this possible conversion was "secured." However, neither Tesla nor Musk had actually secured financing beyond initial conversations with investors. A 2013 S.E.C. policy permits companies to disclose market-moving information via Twitter, provided investors are given advance notice that the corporation may do so. Tesla had given investors notice that Musk’s Twitter account is one venue the company may deliver significant announcements.

          | TBA Law Blog