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Regulators Sue Tesla’s Musk For Fraud, Seek To Bar Him As Director

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Reuters

The U.S. Securities and Exchange Commission on Thursday accused Tesla Inc Chief Executive Elon Musk of fraud and sought to ban him as a director of a public company, saying he made a series of “false and misleading” tweets about potentially taking the electric car company private.

The complaint filed in Manhattan federal court makes Musk one of the highest-profile executives to be accused by the SEC of securities fraud.

It came less than two months after Musk told his more than 22 million Twitter followers on Aug. 7 that he might take Tesla private at $420 per share, and that there was “funding secured.”

Tesla was not immediately available for comment. Its shares fell 5.7 percent in after-hours trading.

Musk has long used Twitter to criticize short-sellers betting against his company, and already faced several investor lawsuits over the Aug. 7 tweets, which caused Tesla’s share price to gyrate.

According to the SEC, Musk “knew or was reckless in not knowing” that his tweets about taking Tesla private at $420 a share were false and misleading, given that he had never discussed such a transaction with any funding source.

The SEC said he also knew he had not satisfied other contingencies when he declared unequivocally that only a shareholder vote would be needed.

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