Tesla shares plunge as regulators launch fraud lawsuit against Elon Musk

Media playback is unsupported on your device                  Media caption Who is Elon Musk

We believe this potential outcome, and an exit by Mr Musk from the company (as he could neither operate within management or on the Board if the court determined) could be a major negative for the stock.

Shares were last down 10.8% at $274.17 in trading before the bell in NY, which would wipe about $6 billion off Tesla's market value.

Musk, 47, is the public face of Tesla and J.P. Morgan analyst Ryan Brinkman questioned how easy it would be for the US$50-billion manufacturer, which is still losing money, to raise funds at affordable rates without him.

Musk, Tesla's chairman and chief executive, has been directly involved in nearly every detail of its Tesla's product development and technology strategy, and is credited as the driving force behind the loss-making company's ability to raise capital.

In a brief joint statement, Tesla and its board said they are "fully confident" in Musk, his integrity and his leadership of the company.

Shares tumbled 12 percent at the opening bell Friday. "Integrity is the most important value in my life and the facts will show I never compromised this in any way", he said.

The SEC determined that Musk came up with that figure because it was 20 percent above Tesla's August 2 closing price of $349.54 and then rounded it up from $419 because his girlfriend thought it "would find it amusing, which admittedly is not a great reason to pick a price".


"I have always taken action in the best interests of truth, transparency and investors", Musk said. The suit was almost avoided entirely but Musk reportedly pulled out of a settlement at the last minute.

'Despite this, we think the company will survive, ' he said.

It turns out that the price Elon Musk came up with to take Tesla Inc. private really was about weed, and that the embattled chief executive officer tweeted the figure to impress his girlfriend, the rapper Grimes.

"Musk acknowledged that no specific deal terms had been established at the meeting and there was no discussion of what would or would not be considered reasonable". Trading volume of the 2025 junk bond ballooned to $34 million on Thursday, versus $6 million on Wednesday, $1 million on Tuesday and $7 million on Monday, according to Reuters trading sources.

The SEC alleged in the 23-page complaint that Musk made the statements using his mobile phone in the middle of a trading day.

In its lawsuit, the SEC alleges Musk's tweets caused market chaos and investor harm and that the Tesla CEO had been vocal about his disdain for short sellers - or people betting shares would fall.

Related:

Comments

Latest news

Samsung releases mid-range triple-camera smartphone
The device supports 4G VoLTE, dual-band Wi-Fi 802.11ac, Bluetooth v5.0, NFC, ANT+, GPS, GLONASS, Beidou, and Samsung Pay. Coming out in various colors, gold, blue, black, red, Xiaomi Redmi 6 Pro seems a nice phone, regarding its design.

Watch Hillary Clinton Interview to Be Murphy Brown's New Secretary
Candice Bergen is seen speaking about the revival of Murphy Brown at the Beverly Hilton Hotel in August. Brown called Clinton "impressive" and "maybe overqualified" and told her she had to think it over.

'Eden Hazard Less Selfish Than Lionel Messi & Cristiano Ronaldo'
With the Belgian's sensational effort, Liverpool's flawless start to the 2018-19 season in all competitions came to an abrupt end.

Facebook says 50m user accounts affected by security breach
And we invalidated the access tokens for the accounts of the 50 million people who were affected - causing them to be logged out. Additionally, Facebook will turn off the " View As " feature until they can conduct a thorough security review.

Elon Musk: 5 things to know about the SEC's fraud complaint
There was no indication of that in a joint statement issued late Thursday by the company and its board. Later in the month, Tesla announced that the go-private plan had been scrapped.

Other news