The US government just sued Elon Musk for misleading investors about taking Tesla private

The US Securities and Exchange Commission filed a lawsuit today (Sept. 27) accusing Tesla $TSLA chief executive Elon Musk of misleading investors in his bid to take the electric car company private.

Musk issued a fateful tweet on Aug. 7 that he was “considering taking Tesla private at $420. Funding secured.” The suit alleges “this statement was false and misleading,” along with similar subsequent statements such as “confirmed” investor support.

The case turns on charges that Musk was either reckless or knowingly issued false statements throughout his attempt to take the company private. Specifically, the SEC states that Musk:

• misconstrued a July 31 meeting between representatives of a sovereign investment fund (presumably Saudi Arabia) in which only a “verbal desire to make a large investment in Tesla” was stated rather than secured funding, as Musk stated.
• failed to discuss with any potential funding source a share price of $420 for taking Tesla private.
• never contacted existing Tesla shareholders or any potential strategic investors to assess interest in taking Tesla  private.
• failed to give Tesla’s Board of Directors a specific proposal to take Tesla private.
• never retained formal advisors to assist in a transaction.
• did not determine if retail investors could remain invested in a private Tesla or identify restrictions for institutional investors.
• failed to identify regulatory approvals for a transaction.

The SEC is not just seeking civil penalties, but barring Musk from serving as an officer and director of Tesla.

You can read the full lawsuit embedded below. The filing is here. A press conference will be held by the SEC at 5pm ET.

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