Securities and
Exchange Commission Documents & Publications
September 28, 2018
The Securities and Exchange Commission today charged Elon
Musk, CEO and Chairman of Silicon Valley-based Tesla Inc., with securities
fraud for a series of false and misleading tweets about a potential transaction
to take Tesla private.
On August 7, 2018, Musk tweeted to his 22 million Twitter
followers that he could take Tesla private at $420 per share (a substantial
premium to its trading price at the time), that funding for the transaction had
been secured, and that the only remaining uncertainty was a shareholder vote.
The SEC's complaint alleges that, in truth, Musk had not discussed specific
deal terms with any potential financing partners, and he allegedly knew that
the potential transaction was uncertain and subject to numerous contingencies.
According to the SEC's complaint, Musk's tweets caused Tesla's stock price to
jump by over six percent on August 7, and led to significant market disruption.
"Corporate officers hold positions of trust in our
markets and have important responsibilities to shareholders," said Steven
Peikin, Co-Director of the SEC's Enforcement Division. "An officer's
celebrity status or reputation as a technological innovator does not give
license to take those responsibilities lightly."
"Taking care to provide truthful and accurate
information is among a CEO's most critical obligations," added Stephanie
Avakian, Co-Director of the SEC's Enforcement Division. "That standard
applies with equal force when the communications are made via social media or
another non-traditional form."
The SEC's complaint, filed in federal district court in
the Southern District of New York, alleges that Musk violated antifraud
provisions of the federal securities laws, and seeks a permanent injunction,
disgorgement, civil penalties, and a bar prohibiting Musk from serving as an
officer or director of a public company.
The SEC's investigation, which is continuing, was
conducted by Walker Newell, and Brent Smyth and supervised by Steven Buchholz,
Erin Schneider, and Jina Choi in the San Francisco Regional Office. The
litigation will be led by Cheryl Crumpton and Barrett Atwood.
No comments:
Post a Comment