Follow and listen to our podcast

StashLearn
Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Money News

Tesla CEO Elon Musk is Sued by SEC

September 28, 2018

The Securities and Exchange Commission wants Musk to step down

2 min read

Update: Elon Musk agreed to step down as Tesla’s chairman, and will personally pay a $20 million fine as a part of a settlement with the SEC on Saturday. Tesla is also paying a $20 million fine and will add two new independent directors to its board. Musk will remain Tesla’s CEO.


Elon Musk, the founder and chief executive officer of electric car company Tesla, is in serious legal trouble.

On Thursday, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Musk, charging him with making a “series of false and misleading statements” to investors.

Tesla’s stock fell more than 12% when markets opened Friday morning.

What happened

The legal charges stem from a tweet that Musk sent in August, saying that he had secured funding from outside investors to take Tesla private at a valuation of $420 a share—about 20% higher than its trading price at the time, according to the lawsuit. The day Musk sent the tweet, the company’s stock closed up about 7%.

The tweet turned out to be false, however, and no funding to buy the company materialized. The company’s stock price has since fallen about 30%.

SEC Action

The SEC is the federal regulatory body that oversees publicly traded companies. The SEC seeks to remove Musk from his role as CEO of Tesla and to prevent him from leading a public company ever again.

The action against Musk is considered by some experts to be one of the most serious undertakings by the SEC against a large public company in some time.

“We allege that Musk’s statements were false and misleading because they lacked any basis in fact,” said Stephanie Avakian, co-director of the SEC’s Division of Enforcement, at a press conference Thursday, according to USA Today.

More background

Details about Musk and Tesla

In a statement reported by CNBC, Musk contested the SEC lawsuit.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

Next for you
Elon Musk May Take Tesla Private: What Does That Mean?

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
money lessons politics budgeting pop culture social media
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.