SEC sues Elon Musk for fraud

Tesla shares have fallen as a result and the story is still unfolding.

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Following up on the previously reported investigations started by the SEC and DOJ, Elon Musk has been officially sued for fraud by the Securities and Exchange Commission because of tweets about Tesla. 

The lawsuit was reported by CNBC and is a breaking story this is currently unfolding. The report also states that shares for Tesla fell roughly 6%. The original investigation was started as a result of Musk tweeting about taking the multinational corporation private and the DOJ has started looking into the same tweets of their own accord.

Section 1 in the summary in this complaint, filed in the Manhattan District Court, reads as follows:

"This case involves a series of false and misleading statements made by Elon Musk, the Chief Executive Officer of Tesla, Inc. (“Tesla”), on August 7, 2018, regarding taking Tesla, a publicly traded company, private. Musk’s statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote. In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source."

It goes on to declare Musk's mention of "taking Tesla private at $420" specifically as false and misleading, stating that his follow up statements on Twitter were also materially false and misleading. It says that "Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions."

Charles Singletary Jr keeps the updates flowing as the News Editor, breaking stories while investigating the biggest topics in gaming and technology. He's pretty active on Twitter, so feel free to reach out to him @The_CSJR. Got a hot tip? Email him at Charles.Singletary@Shacknews.com.

From The Chatty

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    September 27, 2018 1:35 PM

    Charles Singletary Jr posted a new article, SEC sues Elon Musk and Tesla for fraud

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      September 27, 2018 2:05 PM

      I kinda figured that was going to happen. Elon needs to get some sleep, all this long term deprivation and twitter watching is making him insane.

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        September 27, 2018 2:07 PM

        Elon needs to depart Tesla for his next big thing, the same way he left Paypal and became less hands-on with SpaceX. Elon is harming the brand badly.

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          September 27, 2018 2:08 PM

          I mean, that would be ideal, but I think he could pull back a bit and do things better too.

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          September 27, 2018 10:02 PM

          If the SEC has its way, he'll be barred from serving as a director or officer of any publicly traded company.

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      September 27, 2018 2:09 PM

      That seemed like a near certainty almost immediately.

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      September 27, 2018 2:21 PM

      Lol