Sunday, September 26, 2021

SEC sues Musk for fraud, requests he be removed as Tesla CEO

New York, Sep 27 (EFE).- Tesla Inc. founder Elon Musk responded Thursday afternoon to the Security and Exchange Commission’s filing of a fraud lawsuit against him and calling for his removal as the firm’s CEO, calling the move “unjustified.”

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk told CNET.

“I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way,” he said.

El consejero delegado de la compañía Tesla, Elon Musk, durante una reunión hoy con el presidente electo de EEUU, Donald Trump y su vicepresidente, Mike Pence (no aparecen), en la Trump Tower de Nueva York. Lo más selecto del sector tecnológico de Estados Unidos se reunió con Trump, en un intento por concertar posiciones e impulsar la innovación en el país. EFE

The SEC on Thursday presented charges against Musk, accusing him of fraud after last month he announced on Twitter that he was planning to take the automaker private.

The accusations come less than two months after Musk posted his tweet on Aug. 7 announcing that he was considering taking Tesla private at a price of $420 per share and claiming that he had found guaranteed financing for the deal.

“Am considering taking Tesla private at $420. Funding secured,” tweeted Musk.

The SEC, which filed its lawsuit in a New York court, says that Musk issued “false and misleading” statements and failed to properly notify regulators of important company events.

“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 said in its complaing.

“Musk’s false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors,”

The SEC goes on to ask that Musk “be prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act.”

After news broke of the SEC suit, shares of Tesla plunged 10.63 percent in after-market trading and are currently about 30 percent below the highest value they reached last year of $387.46.

Following the unusual Aug. 7 announcement, Tesla shares rose precipitously in price in just minutes, climbing more than 7 percent and closing the trading session 11 percent higher.

After the initial tweet, Musk posted subsequent tweets and reemphasized his intention to take the firm private, and the SEC cited those additional tweets in its complaint as additional misleading statements.

The SEC contends that Musk did not ask Tesla shareholders to approve the key terms of taking the firm private.

The SEC says in its complaint that “Musk knew that he (1) had not agreed upon any terms for a going-private transaction with the Fund or any other funding source; (2) had no further substantive communications with representatives of the Fund beyond their 30 to 45 minute meeting on July 31; (3) had never discussed a going-private transaction at a share price of $420 with any potential funding source.”

Under current US law, company officials are responsible for erroneous statements they make regarding their firms or omitting information needed by investors or shareholders to make an informed decision about their interests in the firm.

The SEC does permit the use of social networks by firms to disseminate information under the condition that the decision to do so be communicated to shareholders.