29 September 2018_campuscad
Security Exchange and Commission filed a complaint against the Tesla CEO Elon Musk over the tweet, he tweeted back on 8th August 2018 considering to “Taking Tesla private at $420, Funding secured”.
On August 24, Musk turned down the plan to take the company private and stocks are going down till date. Investors taking these tweets as a irresponsible and company has lost the trust of public shareholders which lead to significant reduction in market capital and loss of the Tesla as well.
Why Elon musk tweeted?
Tremendous pressure by short traders or investors on Tesla to achieve short term goals in every quarter is hampering the Tesla’s long term vision and goal. An email sent by Elon to his employees after his $420 tweet. (Read here details).
In addition he said, he has discussed the potential funding by Saudi sovereign fund at higher stock prices to secure the funding and cash to operate the Tesla smoothly.
What SEC Want to say?
Tesla is public traded company at NASDAQ. Taking public traded company to private required board’s approval and sufficient funding.
“A chairman and CEO of a public company has important responsibilities to shareholders, neither celebrity status nor reputation as a technological innovator provide an exemption from the federal securities laws” Stephanie Avakian, co-director of the SEC said.
The SEC accused the tweet by Elon is misleading and wants to remove him as an officer or board member of publicly traded company. The SEC has the power to do so and recently it removed the Elizabeth Holmes from being a CEO or director of biotech startup “Theranos” board and banned her for next 10 years.(Read detail story here how once a leading Biotech startup for revolutionizing the blood test shuts down)
The short sellers or traders of TESLA stocks already filed a complaint against the Elon Musk for misleading information through tweet which cost them around $13 billion in losses. Stock prices up after short spike and again went down a day after Elon tweet from $369 to $354 per share leads to losses to traders.
Stock price for Tesla share is $278 on September 28, 2018, down as much as 13.9% in 52 weeks span.
Elon said after the SEC conference that he was saddened to get sued by SEC over fraud. “This unjustified action by the SEC leaves me deeply saddened and disappointed, Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
Tesla Board said in statement: “Tesla and the board of directors are 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. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees,”
For more such daily stories, sign up below.