SEC Suing Tesla CEO Elon Musk for Fraud


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The Securities and Exchange Commission is suing Elon Musk, alleging the Tesla CEO committed securities fraud.

According to The Hill, the SEC, together with the Department of Justice, began investigating Musk after he tweeted earlier this year he had secured funding to take Tesla private at $420 a share.

The SEC say their investigation concluded his “statement was false and misleading” and also allege three other statements he made on the same day were also misleading.

“Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions,” the SEC wrote in the complaint.

“When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a “special purpose fund,” and had not confirmed support of Tesla’s investors for a potential going-private transaction,” The Hill report the complaint alleges.

Shares of Tesla dropped by approximately 10 percent following the news, according to CNBC.

Sources close to the company told CNBC they also expect Tesla to be sued, although the company has not been named as a defendant in the suit.