& # 39; Misleading & # 39; tweets cost Elon Musk, Tesla $ 20M each in SEC settlement

As part of a settlement with the Securities and Exchange Commission, Elon Musk and Tesla were ordered to pay $ 20 million for their role in misleading investors.

This quick solution comes after the federal office Musk with misleading investors accused for a tweet of August where he claimed that he had "secured funding" to take his business privately, including in an interesting lawsuit. As part of the deal, Musk remains CEO of Tesla, but he has to resign from his role as chairman for at least he for the next three years.

To see the tweets that cost Musk $ 20 million, see below:

In the lawsuit, the SEC revealed that Musk chose the price level of $ 420 because "he had recently learned that the number was important in the marijuana culture and thought his girlfriend would find it funny, which is not a good reason to Price. "

"Musk's statements spread through Twitter incorrectly indicated that if he chose to do so, it was almost certain that he could take Tesla privately at a purchase price that represented a significant premium over the then-current rate of exchange. the Tesla share, which secured a multi-billion dollar transaction for this multi, and that the only event was the vote of a shareholder, "was the SEC's complaint of late last week.

"In fact and factually, Musk had not even talked about, much less confirmed, important deal terms, including price, with any possible source of funding."

The SEC said in a statement that Tesla had been included in the settlement for "not having required disclosure checks and procedures related to Musk's tweets."

Tesla is obliged to appoint two new independent members to the board of directors and to set up a committee to supervise the communication of Musk as part of the settlement. The SEC says that while Tesla announced that Musk & # 39; s Twitter account would serve as a medium to announce news and information & # 39 ;, the company had no procedures to ensure that its comments information which should be made public.

"The total package of remedies and help announced today has been specifically designed to address the misconduct in question by strengthening Tesla's corporate governance and oversight to protect investors," said Stephanie Avakian, co-director of the enforcement department of the SEC, in the news of the agency release.

Steven Peikin, the other director of the enforcement department, said that this settlement was made with the shareholders of Tesla in mind with the aim to prevent further "disruption" and "damage".

After sending the tweets in early August, the share price of Tesla grew by more than 6 percent and then by as much as 10 percent at the end of the day. The Associated Press reports that the Tesla shares fell 14 percent on Friday as a result of the indictment against the CEO.

In the lawsuit filed with the Southern New York District in the New York District in Manhattan, the SEC also pointed to these musk & tweets for misleading investors:

"Musk knew or was reckless in not knowing that each of these statements was inaccurate and / or misleading because he did not in fact have a sufficient basis for his allegations," the SEC said about the tweets from Tesla's CEO.

"When he made these statements, Musk knew he had never discussed a going-private transaction of $ 420 per share with a possible source of funding, had done nothing to investigate whether it would be possible for all current investors to stay with Tesla as a private person, company through a special purpose fund, and had not confirmed the support of Tesla's investors for a potential private transaction. & # 39;

A.P. notes that Musk has an estimated fortune of $ 20 billion, and that Tesla held cash positions of $ 2.2 billion at the end of June.

FILE – Tesla CEO Elon Musk

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