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Regulators accuse Tesla's Elon Musk of securities fraud Regulators accuse Tesla's Elon Musk of securities fraud
(35 minutes later)
The Securities and Exchange Commission has filed a lawsuit accusing Tesla boss Elon Musk of securities fraud.The Securities and Exchange Commission has filed a lawsuit accusing Tesla boss Elon Musk of securities fraud.
The US financial regulator says Mr Musk's claims that he had secured funding to take the electric carmaker private were "false and misleading".The US financial regulator says Mr Musk's claims that he had secured funding to take the electric carmaker private were "false and misleading".
They led to confusion in the stock market and harmed investors, according to the complaint. It is seeking to bar Mr Musk from acting as an officer or director of a publicly traded company.
The SEC is seeking to bar Mr Musk from acting as an officer or director of a publicly traded company. Mr Musk called the action "unjustified" saying he acted in the "best interests of truth, transparency and investors".
It is also seeking financial penalties. "Integrity is the most important value in my life and the facts will show I never compromised this in any way," he said in a statement.
Mr Musk startled the business world last month when he took to Twitter to announce that he was considering a plan that would de-list the company from the stock exchange.Mr Musk startled the business world last month when he took to Twitter to announce that he was considering a plan that would de-list the company from the stock exchange.
He wrote he had "funding secured" for the plan, which would value Tesla at $420 per share. He wrote he had "funding secured" for the proposal, which would value Tesla at $420 per share.
The statements "created the misleading impression that taking Tesla private was subject only to Mr Musk choosing to do so and a shareholder vote", according to the SEC complaint.The statements "created the misleading impression that taking Tesla private was subject only to Mr Musk choosing to do so and a shareholder vote", according to the SEC complaint.
"In truth and in fact Musk had not even discussed much less confirmed key deal terms, including price, with any potential funding source," it says. "In truth and in fact Musk had not even discussed much less confirmed key deal terms, including price, with any potential funding source," it said.
The 7 August tweets took even people within the company by surprise.The 7 August tweets took even people within the company by surprise.
"Was this text legit?" the firm's head of investor relations wrote to Mr Musk's chief of staff, according to the complaint. "Was this text legit?" the firm's head of investor relations wrote to Mr Musk's chief of staff, the complaint says.
Tesla shares soared after Mr Musk's announcement, before retreating amid questions and doubts.
Weeks later, Mr Musk backed away from the plan, citing investor feedback.Weeks later, Mr Musk backed away from the plan, citing investor feedback.
Mr Musk is co-founder of Tesla and has served as chief executive since 2008. The SEC, which is also seeking financial penalties, said his claims created confusion in the stock market and harmed investors.
"Taking care to provide truthful and accurate information is among a CEO's most critical obligations," said 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."
Mr Musk is co-founder of Tesla and has served as chief executive since 2008. He is also known as the head of the rocket company SpaceX.
The lawsuit was filed on Thursday in a federal court in Manhattan.The lawsuit was filed on Thursday in a federal court in Manhattan.
It sent shares of the firm down more than 10% in after-hours trade.It sent shares of the firm down more than 10% in after-hours trade.
Analysis - Dave Lee, BBC North America technology reporter, San Francisco:
Whatever the state of mind Elon Musk was in when he announced he had "funding secured", it could end up costing almost everything he holds dear. It would be nobody's fault but his own.
Wall Street veterans - and indeed, anyone with a modicum of knowledge of how the financial markets work - predicted this very scenario the moment those tweets were posted.
Mr Musk is famously an unconventional chief executive, but when it comes to the financial markets, you can't flout the rules without serious consequences.
It's clear, from emails contained in the SEC's filing, that staff at Tesla were caught completely off guard. His head of investor relations asked if the tweets were "legit". The Nasdaq, confused, halted trading. It all makes Mr Musk unfit to run a public company, the SEC says.
All this because of a tweet sent because Mr Musk thought his girlfriend "would find it funny".