SEC just called Elon Musk a liar. The stock is reacting accordingly.
The complaint boils down to what the SEC thinks were “false and misleading” statements by Musk:
Musk made multiple materially false statements on August 7, and taken together, his August 7 statements left market participants with the false and misleading impression that if Musk chose to take Tesla private at $420 per share, the only outstanding requirement to be satisfied was a shareholder vote….
Musk’s statements regarding specific terms of a transaction to take Tesla private created the misleading impression that these terms had been decided upon, when in fact, they had not even been investigated or determined to be possible.
The SEC also claims that Musk “Knew or Was Reckless in Not Knowing that His Statements Were False and Misleading”:
Unlike market participants reading his tweets, Musk knew that his ostensibly “secured” funding was based on a 30 to 45 minute conversation regarding a potential investment of an unspecified amount in the context of an undefined transaction structure. Musk also knew that there were many uncertainties beyond just a shareholder vote that would have had to be resolved before any going-private transaction could have been possible. As a result, Musk knew or was reckless in not knowing that his August 7 statements were false and misleading.