Wednesday, 17 October, 2018

Another hairpin turn for Tesla as stock dives on SEC charge

Musk's Tesla position uncertain as US regulators sue Musk for fraud Elon Musk set Tesla share price based on 'marijuana joke' to impress girlfriend
Lindsey Cook | 30 September, 2018, 01:34

The Securities and Exchange Commission has opened a case against Tesla and SpaceX CEO Elon Musk.

A site selling "Save Elon" merchandise has been launched to raise awareness for Tesla CEO Elon Musk's lawsuit with the Security Exchange Commission.

The email was viewed by Bloomberg, which reports that it was written by Elon Musk to Tesla employees.

According to the legal docs. He has 45 days to relinquish his chairman title.

If Musk had accepted the agreement, Tesla would have been forced to appoint two new independent directors to its board of directors. After Musk's tweet, Tesla's stock jumped by over 6 percent on August 7, the SEC said.

It remains unknown who started the shop, or if funds made from selling the products will help cover billionaire Musk's defense fund.

In a complaint filed in federal court in Manhattan, the agency said Musk either "knew or was reckless in not knowing" that a series of statements he made about taking his company private were false or misleading. Based on that conversation, the bank says "the DOJ's involvement depends on proving the Musk tweet was meant to manipulate the stock".

The Tesla CEO who made his fortune and his renegade-genius reputation by bursting through the barriers of conventional thinking faces a humiliating comedown as government regulators try to oust him from the company in a lawsuit accusing him of duping the electric vehicle maker's stockholders.

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Tesla did not immediately reply to CNN's request for comment.

"It's going to be a very long and challenging period for him and the company", Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of DE, told ABC News.

Musk's tweets saw Tesla's stock jump by more than six per cent on August 7, but the price crashed by more than 13 per cent when the SEC filed its complaint.

Musk, 47, is the public face of Tesla, and has driven it to the verge of profitability with a costly ramp-up of production of its Model 3 sedan over the past year.

Musk last month in a blog said he left a July 31 meeting with the fund's managing director "with no question that a deal with the Saudi sovereign fund could be closed".

Tesla stock plunged 14 percent to $264.77 Friday, wiping out $7.3 billion in shareholder value.

The Silicon Valley billionaire, who within three weeks of the tweets had abandoned the plan to delist Tesla, said overnight he had done nothing wrong and the company's board reiterated its support for him.

Some analysts are concerned about what Musk departure could do to Tesla's stock.

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