Tesla Shares Tumble Into An Abyss After SEC Sues Elon Musk For Fraud
Tesla’s share fell 4 percent after the Securities and Exchange Commission sued CEO Elon Musk for fraud following his tweet about taking the company private, CNBC reported Thursday afternoon.
The SEC has spent two months trying to determine if Musk’s promise in August to take Tesla private was designed to hurt the company’s short-sellers, according to an August report from The Wall Street Journal. The billionaire entrepreneur told his Twitter followers in an Aug. 7 post that he had sufficient funding to take the company out of the public domain.
The WSJ reported at the time that the agency is pressing Tesla’s board on how much information the CEO shared ahead of last week’s Twitter announcement. The report came shortly after source told The Financial Times that the Saudi’s Public Investment Fund (PIF) bought shares of the California-based company.
The PIF’s position is worth between $1.7 billion and $2.9 billion at Tesla’s current share price. The stake makes the fund one of Tesla’s eight biggest shareholders. Musk used recent discussions with the Saudi family as the justification for the tweet.
Musk’s belligerent attitude toward short-sellers is probably not helping his case. He engaged in a highly unusual and combative tit-for-tat with reporters on the call in April, which culminated in Musk calling reporters “boneheaded” for asking questions about problems plaguing the electric automaker. (RELATED: ‘Unusual’: Elon Musk Appears To Have Nervous Breakdown During Bizarre Tesla Earnings Call)
The analysts on the call were asking a series of questions about aspects of Tesla’s business model, which has been scrutinized recently for failing to meet crucial sales deadlines. The company’s Model 3 vehicle, which many argued was the car that would thrust Tesla into the automotive industry elite, has sputtered, flopped and failed to hit the sales marks Musk previously promised.
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