Elon Musk Reportedly Bailed On SEC Settlement At The Last Minute

Tesla was off about 11 per cent at $273.60 following a bombshell announcement by the US Securities and Exchange Commission late Thursday that it was charging Musk for making "false and misleading" statements on Twitter on a now-aborted effort to take the electric vehicle maker private. CEO over tweets may cost the carkmaker's shareholders close to $20 billion.

Tesla shares plunged Friday in the first session since USA securities regulators sued chief Elon Musk for fraud, with the company shedding more than 10 per cent as U.S. stocks retreated. It recommends Musk pay a penalty and seeks to bar him from being an officer or director at a public company.

Musk also promised on Twitter that retail investors would be able to maintain their stake in a private Tesla, even though, SEC officials alleged, he had been told before tweeting that this would be "very hard". "Securing attractive funding in the future could be more hard".

As the month went on, the story changed: Musk said that there had been discussions with potential Saudi backers, but that they didn't go ahead with a firm, contingency-free commitment to funding.

He said: 'This unjustified action by the SEC leaves me deeply saddened and disappointed'.

Tesla stock plunged 14.5 percent to $262.88 in heavy trading Friday.

The SEC's lawsuit, filed in Manhattan federal court, caps a tumultuous two months set in motion on August 7 when Musk told his more than 22 million Twitter followers that he might take Tesla private at $420 per share, with "funding secured".

"Historically, Tesla has had easy access to capital markets, largely due to the public's perception of Musk as a visionary", continued Langan, who has a $US190 price target for the stock.

Shares of Facebook declined 2.7% to $164.28 at 1:50pm in NY.

Musk made it seem "that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote", the complaint states. Later in the month, Tesla announced that the go-private plan had been scrapped.

Another big issue on the day of the tweet was the fact that Nasdaq rules specify that listed companies such as Tesla must notify Nasdaq at least ten minutes prior to publicly releasing material information about events like going private.

Mr. Musk insists he has "always taken action in the best interests of truth, transparency and investors" and that the facts will bear him out.

Spiegel also echoed the concerns of corporate governance experts who have lambasted Tesla's board for being too beholden to a CEO that they are supposed to oversee.

  • Eleanor Harrison