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SEC sues Elon Musk for fraud and seeks to remove him from Tesla

The Securities and Exchange Commission (SEC) have sued Elon Musk and Tesla for fraud over the company’s halted plans to take the electric car company private.

The complaint refers to a tweet Musk sent on August 7:

The SEC said that Musk had in reality not 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.

The CEO had said in a blog post on August 13 that discussions with Saudi Arabia’s were promising and that the sovereign-wealth fund had approached him several times over nearly two years about providing financial support to take Tesla private.

But in practice, Musk’s discussion with the sovereign-wealth fund did not appear to include any financial details about such a transaction, the SEC stretched. And after pressure from the shareholders, Musk had announced he had decided against the idea of taking Tesla private.

That tweet and the following ones 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.

Musk replied promptly to the SEC suing by saying that: “This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

It comes after Tesla being under investigation by the US justice department (DoJ) last Tuesday over the tweet.

The criminal probe announcement had caused Tesla’s shares to drop over 7%, and it was already running in conjunction with a previously reported civil inquiry by securities regulators.

Should the SEC be successful in this trial, Musk could be forced to leave Tesla and be banned from leading a company altogether.

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BY SHACK15

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