SEC Sues Tesla's Elon Musk Over Fraud in Move That Could Oust Him


Tesla's in a whole world of hurt. Shares are down a fourteen percent right now after the SEC had announced that is suing CEO and chairman Elon Musk founder of the company for fraud apparently over this a tweet he sent out last month where he said he was considering taking the public private taking the company private at four hundred and twenty dollars a share funding secured. He the SEC was investigating their parents. Currently we're on the point of a settlement, which would require him to not be chairman of the company for two years into higher outside directors. And this sort of thing at the last minute, reportedly he decided to fight this. And so now they are suing him. I don't believe the company will find out shortly. They're suing him for fraud. They want him disbarred from ever being an officer in a public company, which means he could not he could no longer run tesla, though, he could still be its largest shareholder you'd have to just focus on SpaceX which remains private for now. What does this mean for the company for you? If you own a tesla if you're a shareholder. What does it mean for Elon Musk him? So many people admire on the phone with me right now is CNBC's auto reporter filibuster. Who is all over this story? Phil. How are you? I'm good, gene. How are you? Good. This is crazy. What what evidence does the SEC have that Elon Musk committed fraud? Well, they're going to point to the Twitter trail and a Twitter trail clearly shows that he made statements that they believe are false and misleading and in the words of the SEC caused market chaos. And if you go back to August seven when he set out the tweet saying considering taking the company private at four hundred and twenty dollars funding security, those last two words that are most problematic because as we now know there was no deal. Locked in. Now, iwon musk has said and continues to maintain. Look I thought that we could get a deal done with the Saudi sovereign fund to fund us going private. But it wasn't a true deal. In terms of. There was no offer sheet. There was nothing that had been signed off on by either the Saudis or by a board members at tesla. And when you combine that with other comments that EON musk has either tweeted out or has made in interviews about his lack of love if you will for those who short Tesla's stock who want to drive it down who he believes her trying to ruin his company. They are essentially saying the FCC is saying look you were trying to manipulate tesla stock drive it up higher which would force those who are betting against the company to cover their bet meeting buying bunch of shares and driving higher after that. Exactly. And so that's their that's the allegation there. And you were correct that it is only against the on musk tesla. The corporation has not been charged by the SEC that could change there could be some charges there. But given the fact that this was primarily Elon Musk freelancing and doing this on his own as we know from the New York Times interview in from other interviews, there was no consultation with board. Members. This was not a board meeting where they said that sounds good. Let's go forward with this. This was Yuan must deciding to tweet this out one day. And so I I don't that. They're going to go after tesla the corporation and the question remains, why did he turn down? According to our our reporting and the reporting from other outlets a deal to settle with the SEC which would have allowed him to remain SEO. So it's quite the soap opera to say. The least there are reports that in the SEC complaint he chose the number four twenty two amuse his then girlfriend the singer Grimes. Is there any smoking gun Email or text from internet investor relations saying what's what funding and him saying, oh, I'm just kidding around. I mean is there anything like that that we know about yet not yet? And in fact, we've had a couple of former SEC attorneys come on CNBC today who have said, look if you just look at the complaint right now when we don't know all the evidence that the SEC has. But you know, they came out both guns blazing yesterday saying, hey, this guy. No, just because you're a celebrity and a brilliant entrepreneur. And visionary. And this generation's version of Thomas Edison, doesn't give you the right to send out these tweets. We haven't seen any type of smoking gun document at this point. We do know from the New York Times interview that he indicated look I got I got four hundred nineteen dollars because I went twenty percent higher than where I was trading. And then I then I went up to four twenty read between the lines about whether or not there is a reference to the drug. But that's the thing read between the lines that's different than proving intent to commit fraud. Remember, you don't have to. It's a civil case don't have to prove intent here. You can the SEC could convict him strictly on the basis of recklessness. What's happening with the Justice department criminal investigation that is apparently continuing, and you know, we have seen this in in business world where sometimes you see a separate. Investigation turned into charges criminal charges, and maybe the civil charges from the SEC are rolled into that. Or they're dropped. That's certainly a possibility that is still out there doesn't mean it's going to happen. But that's another cloud. That is to a certain extent hanging over tesla

Coming up next