We’ve always held the position that, if you’re going to say things on social media, you need to be careful. Learning that lesson the hard way this year is Elon Musk.
The Tesla founder is now in hot water with the United States Securities and Exchange Commission (SEC) over some tweets he made last month regarding taking the company public and securing funding for said venture.
In particular the SEC has cited a tweet that Musk sent out on 7th August is which he confirmed his intentions to the public company private, going on to add in a later blog post that he with Saudi Arabian investors to assist.
The SEC then subpoenaed Tesla following those tweets and have now filed a lawsuit against Elon Musk and the company as a result of their investigation.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
“In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” prosecutors laid out in their complaint.
Adding that his tweets were “false and misleading.”
“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,” they continued.
Adding that, “Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a ‘special purpose fund,’ and had not confirmed support of Tesla’s investors for a potential going- private transaction.”
The SEC prosecutors note that Tesla’s share price went up as a direct result of Musk’s tweets, but the actions he took following the social media postings ultimately harmed the interests of investors.
In response to the complaint, Elon Musk issued a statement to Buzzfeed to air his thoughts.
“I have always taken action in the best interests of truth, transparency and investors,” said Musk.
As for what steps Musk will take next remains to be seen, with The Verge pointing out that cases such as this often end in settlement, but adding that it all depends on how far the outspoken founder is willing to fight this case.
Either way this will not bode well for those who have invested in Tesla Motors.