Tesla Shares Plummet After SEC Charges Musk With Fraud

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Elon Musk

Tesla Inc (NASDAQ: TSLA)

 

The U.S. Securities and Exchange Commission (SEC) has sued Tesla chief executive officer Elon Musk for fraud. The agency accuses the billionaire entrepreneur of making misleading or false statements on August 7, when he tweeted to his 22 million followers that he was “considering taking Tesla private at $420 a share.”

Musk then went on to say that he had secured funding needed to take the company private. The tweet sent Tesla stock up 11% before the he later revealed that he had only held preliminary talks about taking the company private and that no funding had been secured.

The agency filed the lawsuit in Manhattan federal court saying, “Musk made his false and misleading public statements about taking Tesla private using his mobile phone in the middle of the active trading day. He did not discuss the content of the statements with anyone else prior to publishing them to his over 22 million Twitter followers and anyone else with access to the Internet. He also did not inform Nasdaq that he intended to make this public announcement, as Nasdaq rules required.”

The agency also wants the court to bar Musk from assuming any executive role in a public company. It also as well as a civil fine

Investors in the electric car maker have also filed lawsuits alleging that his comments on Twitter were aimed at manipulating the stock price. Tesla has not issued comments regarding the lawsuit.

elon musk

Shares tumbled $33.77, or 11.15% to trade $273.75 in the extended trading session after news of the lawsuit reached investors of the Palo Alto, California-based electric-car maker.

Tesla Inc Company Profile

Tesla, Inc. designs, develops, manufactures, and sells electric vehicles, and energy generation and storage systems in the United States, China, Norway, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage.

The Automotive segment offers sedans and sport utility vehicles. It also provides electric vehicle powertrain components and systems to other manufacturers; and services for electric vehicles through its company-owned service centers, Service Plus locations, and Tesla mobile technicians. This segment sells its products through a network of company-owned stores and galleries.

The Energy Generation and Storage segment offers energy storage products, such as rechargeable lithium-ion battery systems for use in homes, commercial facilities, and utility grids; designs, manufactures, installs, maintains, leases, and sells solar energy systems to residential and commercial customers; and sell renewable energy to residential and commercial customers.

The company was formerly known as Tesla Motors, Inc. and changed its name to Tesla, Inc. in February 2017. Tesla, Inc. was founded in 2003 and is headquartered in Palo Alto, California. – Yahoo Finance

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