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| S.E.C. Sues Tesla’s Elon Musk, Seeking to Bar Him From Running a Public Company | |
| (35 minutes later) | |
| The Securities and Exchange Commission filed a lawsuit Thursday against Elon Musk, the chief executive of Tesla, accusing him of making false public statements with the potential to hurt investors. | The Securities and Exchange Commission filed a lawsuit Thursday against Elon Musk, the chief executive of Tesla, accusing him of making false public statements with the potential to hurt investors. |
| The lawsuit, filed in federal court in New York, seeks to bar Mr. Musk from serving as an executive or director of publicly traded companies. Tesla, the electric-car maker of which Mr. Musk was a co-founder, is publicly traded. | |
| The suit relates to an Aug. 7 Twitter post by Mr. Musk, in which he said he had “funding secured” to convert Tesla into a private company. | The suit relates to an Aug. 7 Twitter post by Mr. Musk, in which he said he had “funding secured” to convert Tesla into a private company. |
| The S.E.C. said Mr. Musk “knew or was reckless in not knowing” that his statements were false or misleading. “In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the S.E.C. said in its lawsuit. | |
| Tesla didn’t immediately respond to requests for comment. Roel Campos, a lawyer for Mr. Musk and a former S.E.C. commissioner, did not respond to a request for comment. | |
| Mr. Musk, who sometimes sleeps on Tesla’s factory floor as he works to iron out production problems, is widely regarded by analysts and investors as the creative engine behind Tesla. The company’s shares tumbled more than 10 percent in after-hours trading following the filing of the S.E.C. lawsuit. | |
| The S.E.C. already had been investigating Tesla when Mr. Musk posted his going-private tweet while he was driving himself to the airport in a Tesla Model S. The company’s shares immediately rocketed higher. | |
| It soon emerged that Tesla’s board members were blindsided by Mr. Musk’s Twitter post. Tesla at the time hadn’t hired investment banks or others to help raise the money that would be needed to take Tesla private. And many Tesla investors — natural places for Mr. Musk to seek financing — said they hadn’t heard anything from Mr. Musk before his tweet. | |
| The S.E.C. soon issued a round of subpoenas to Tesla and the financial institutions it eventually hired for advice on a potential conversion into a private company. The agency also interviewed a number of Tesla board members, according to a person familiar with the matter. | |
| The complaint said Mr. Musk “knew that he had never discussed a going-private transaction at $420 per share with any potential funding source.” | |
| The S.E.C. said that Mr. Musk had been in a persistent feud with investors who were betting that Tesla shares would fall. The complaint notes that Mr. Musk had discussions in late July with a foreign investment fund that had recently acquired a 5 percent stake in Tesla. In those discussions, Mr. Musk said he was thinking about taking Tesla private, but regulators said nothing formal was agreed on. | |
| The lawsuit is the latest in a series of escalating problems for Tesla and Mr. Musk. The company has been struggling to achieve the ambitious production targets that Mr. Musk had publicly outlined. He has made a series of unusual public comments or appearances, including an internet interview in which Mr. Musk appeared to smoke marijuana. | |
| Federal prosecutors in California also have sought information from Tesla, an inquiry that appears to be at an early stage. |