US regulators sue Tesla's Musk for fraud

Tesla Motors CEO Elon Musk. Photo: Reuters
Tesla Motors CEO Elon Musk. Photo: Reuters

The US Securities and Exchange Commission on Thursday (local time) accused Tesla Inc Chief Executive Elon Musk of fraud and sought to ban him as a director of a public company, saying he made a series of "false and misleading" tweets about potentially taking the electric car company private.

The complaint filed in Manhattan federal court makes Musk one of the highest-profile executives to be accused by the SEC of securities fraud.

It came less than two months after Musk told his more than 22 million Twitter followers on August 7 that he might take Tesla private at $US420 per share, and that there was "funding secured."

Tesla was not immediately available for comment. Its shares fell 5.7% in after-hours trading.

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.

According to the SEC, Musk "knew or was reckless in not knowing" that his tweets about taking Tesla private at $US420 a share were false and misleading, given that he had never discussed such a transaction with any funding source.

The SEC said he also knew he had not satisfied other contingencies when he declared unequivocally that only a shareholder vote would be needed.

Thursday's complaint also seeks to impose a civil fine and other remedies. The SEC does not have criminal enforcement power.

On August 24, after news of the SEC probe had become known, Musk blogged that Tesla would remain public, citing investor resistance.

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