On July 27, I wrote that Elon Musk’s “increasingly bizarre and out-of-control behavior of late certainly raises doubts about his qualities as a business leader. The outlook for Tesla does not look good either.”
That was before Musk pulled a little stunt on Twitter that caught the attention of the SEC, and now the tycoon is in serious trouble:
The Securities and Exchange Commission sued Tesla’s CEO on Thursday for making “false and misleading” statements to investors. It’s asking a federal judge to prevent Musk from serving as an officer or a director of a public company, among other penalties.
The complaint hinges on a tweet Musk sent on August 7 about taking Tesla private.
“Am considering taking Tesla private at $420,” Musk said. “Funding secured.”
The SEC said he had not actually secured the funding.
“In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the SEC said in its complaint.
That tweet, and subsequent tweets from Musk over the next three hours, caused “significant confusion and disruption in the market for Tesla’s stock,” as well as harm to investors, the SEC said. On the day of Musk’s tweet, Tesla’s stock shot up nearly 9%. It has declined substantially since then.
Tesla’s (TSLA) stock dropped more than 11% in after-hours trading Thursday.
The best part:
The complaint alleged that Musk rounded up the go-private price to $420 per share “because he had recently learned about the number’s significance in marijuana culture” and thought his girlfriend would find it funny. He was dating the musician Grimes.