Shares of electric-car maker Tesla (NASDAQ:TSLA) were slammed during after-hours trading on Thursday when news broke that the SEC filed a complaint against CEO Elon Musk, stating he made “a series of false and misleading statements” on Twitter last month about the possibility of taking the company private. As of 6:03 p.m. EDT, Tesla stock was down 13.3% in after-hours trading on Thursday.
The SEC complaint points out a number of concerns about Musk’s communication surrounding the possibility of taking the company private — all of which began with an Aug. 7 tweet in which the CEO stated he was “considering taking Tesla private at $420,” noting that funding had been “secured.”
Here’s a closer look at the SEC’s complaint
In addition to having a problem with Musk’s initial tweet stating that funding had been “secured,” the SEC also listed the following statements from Musk on Twitter as “materially false and misleading”:
- Musk noted that, if the transaction closed, shareholders would be able to either “sell at 420 or hold shares & go private.”
- Musk said, “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.”
Regarding these statements from Musk, the SEC said, “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.”
As the SEC notes in its complaint, Musk’s comments had a significant impact on the stock price, as shares surged over 6% between the time of the tweet and the end of the trading day.
In total, shares closed the trading day up 11%, but some of that gain happened before the tweet…
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