Coverage: SEC files charges against Tesla’s Musk

U.S. securities regulators on Thursday accused Tesla Inc. Chief Executive Elon Musk of fraud and sought to remove him from his role in charge of the electric car company, saying he made a series of “false and misleading” tweets about potentially taking Tesla private last month.

Jonathan Stempel and Alexandria Sage of Reuters had the news:

Musk, 47, is one of the highest-profile tech executives to be accused of fraud by the Securities and Exchange Commission. Losing its public face and guiding force would be a big blow for money-losing Tesla, which has a market value of more than $50 billion, chiefly because of investors’ belief in Musk’s leadership.

Tesla shares tumbled 12 percent in after-hours trading.

“Elon is Tesla and Tesla is Elon and that’s great when Elon is scoring touchdowns and grand slams but not so great when there are negative things tied to him,” said Karl Brauer, executive publisher at Kelley Blue Book. “I don’t know how you spin an SEC lawsuit that seeks to remove you from leadership of your own company.”

Musk said he had done nothing wrong. “This unjustified action by the SEC leaves me deeply saddened and disappointed,” he said in a statement. “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.”

Kevin McCoy and Nathan Bomey of USA Today reported that the SEC alleges that Musk’s statements had no basis in fact:

“We allege that Musk’s statements were false and misleading because they lacked any basis in fact,” said Stephanie Avakian, co-director of the SEC’s Division of Enforcement, at a press conference Thursday.

Musk has maintained that plentiful funding was available to turn Tesla into a private entity, which he briefly argued would help Tesla focus on long-term growth. He had said that Saudi Arabia’s sovereign wealth fund effectively offered to finance the deal, though the fund has not confirmed that.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said Thursday in a statement. “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.”

The SEC charges focus on a series of tweets in which Musk told his approximately 22 million Twitter followers that he was considering a multi-billion dollar transaction that would take Tesla private at $420 per share — a significant premium to the price at the time.

Sara Salinas of CNBC.com reported that Tesla was not named as a defendant:

Sources close to the company told CNBC the company was also expecting to be sued, though Tesla was not named as a defendant in the complaint.

Shares of the automaker fell more than 13 percent in extended trading Thursday. The stock is roughly 30 percent below its 52-week high of $387.46.

The SEC complaint alleges that Musk issued “false and misleading” statements and failed to properly notify regulators of material company events. The SEC held a press conference Thursday evening regarding the complaint.

Among other remedies, the SEC is seeking to bar Musk from serving as an officer or director of a publicly traded company if found guilty.