Elon ‘Controversy’ Musk is in the news yet again. This time, it seems serious. The U.S. Securities and Exchange Commission (SEC) has accused Musk of fraud. What fraud, you ask? The agency says he made a series of “false and misleading” tweets about potentially taking Tesla private last month. They want him fired from Tesla.
The Full Story
On August 7, Musk had tweeted to his 22 million Twitter followers that he might take Tesla private at $420 per share, with “funding secured”, which, according to SEC’s lawsuit, described Musk surprising his own team and investors. Twelve minutes after the first tweet, Tesla’s head of investor relations texted Musk’s chief of staff to ask whether Musk’s announcement was “legit," the SEC said in its report.
The SEC lawsuit comes at a time when Tesla has been struggling to deliver its new Model 3 sedan, which is very important to the company’s future profitability, after a long series of production issues and delays. Despite the rumors that there are conflicts within the company over the leadership, Tesla’s board said they are “fully confident” in Musk. However, this recent news led to Tesla’s shares plunging by 12 percent.
According to the lawsuit, the SEC said Musk met for less than an hour with three representatives of Public Investment Fund, at the company’s Fremont, California plant on July 31st, during which the lead representative for the Saudi Arabian sovereign wealth fund expressed interest in taking Tesla private if the terms were “reasonable.” The SEC said that Musk did not communicate with the fund representatives again until three days after his tweets. After news of the SEC probe had become general knowledge, Musk blogged that Tesla would remain public, citing investor resistance. According to the Wall Street Journal, the lawsuit was filed after settlement talks had failed.
Conclusion
While there are some who may resonate with what the SEC and DoJ feel, the majority of people (including myself) believe that the agencies are being too harsh. Among many is Karl Brauer, executive publisher at Kelley Blue Book, who said, “Elon is Tesla and Tesla is Elon and that’s great when Elon is scoring touchdowns and grand slams but not so great when there are negative things tied to him.” Musk said he had done nothing wrong, saying "This unjustified action by the SEC leaves me deeply saddened and disappointed."
Do you think Musk deserves to be fired, or do you feel this is a little too harsh on this generation’s visionary? Share your thoughts in the comments section below.
Further Reading
Read our full review on the 2018 Tesla Model 3.
Read more about Elon Musk.
Read more Tesla news.