The US Securities and Exchange Commission (SEC) has opened a case against Tesla and SpaceX CEO Elon Musk.
As first reported by Bloomberg, this suit, filed to New York’s Southern District Court today. follows a series of scandals around the CEO’s online behaviour, ranging from a defamation suit filed by a cave diver Musk referred to a “paedo guy,” to tweeting that he had secured funding to take the company private at a $420 (£321) share price. The SEC alleges the latter tweets “harmed” some investors and were in violation of the 1934 US Securities Exchange Act, and that the price in question was arrived at solely because “[Musk] had recently learned about the number’s significance in marijuana culture.”
In the suit, the penalties the SEC is seeking include that Musk “be prohibited from acting as an officer or director” of a public company and that he “disgorge [...] any ill-gotten gains” that could have resulted from his tweets. The SEC also alleged that Musk “will violate [the Securities Exchange Act] again” if he is not “restrained and enjoined.”
Tesla’s stock dropped by more than ten per cent in after-hours trading. We’ve reached out to Tesla, Elon Musk, and the SEC for more information. We’ll update this story if we hear back.