The US Securities and Exchange Commission is suing Elon Musk for fraud announcing his intentions to take Tesla private last month.
The legal case filed by the regulator accuses Musk of issuing “false and misleading” statements when he declared he’d secured funding to take the electric car company private at $420 per share on 7 August.
Musk, who is chief executive of both Tesla and space exploration firm SpaceX, had not discussed specific deal terms with financing partners, and that his tweet had caused “significant market disruption“, the SEC said.
Am considering taking Tesla private at $420. Funding secured.— Elon Musk (@elonmusk) August 7, 2018
It also claimed Musk had misled investors and violated anti-fraud provisions and is seeking an unspecified sum, alongside preventing him from serving as an officer or director of a public company.
Musk later explained he had held discussions with the Saudi Arabian sovereign wealth fund, and was confident he would receive funding.
He halted the privatisation proposal on 24 August, claiming that feedback from Tesla’s shareholders had made it clear they believed the company was better off as public.
“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,’” he said in a statement at the time.
“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” said Steven Peikin, co-director of the SEC’s Enforcement Division in a statement. “An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”
Musk called the SEC’s legal action “unjustified,” saying it had left him “deeply saddened and disappointed.”
“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,” he added.
Tesla released a statement on Thursday evening saying it and the board of directors were “fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century”.
The chief executive recently gave an interview claiming the past 12 months had been most “difficult and painful year of my career”, as Tesla struggles to meet targets for its latest Model 3 electric car.
Musk has been also criticised for his erratic behaviour in recent months. British diver Vernon Unsworth is suing the 47-year old after he falsely accused Unsworth of being a paedophile in retaliation for the diver’s comments about Musk’s involvement in the Thai schoolboy rescue mission.
Musk also cut analysts off from speaking during an earnings call in May, branding their “bonehead” questions too dry and boring to answer.