We all knew through Bloomberg that Securities and Exchange Commission (SEC) wanted to prosecute Tesla and Musk in Manhattan Federal Court for fraud. This decision shook the market and Tesla shared were dropped by 6% earlier.
If you were someone who is not following the matter, we just need to tell you that Musk’s tweet about taking Tesla private at $420 and funding secured backlashed strongly. The Securities and Exchange Commission said in their statement that Musk’s tweet “created the misleading impression that taking Tesla private was subject only to Mr. Musk choosing to do so and a shareholder vote.”
They further stated, “in truth and in fact Musk had not even discussed much less confirmed key deal terms, including price, with any potential funding source.”
The SEC also claims that Musk figured out the $420 share value through “assuming 20 percent premium over Tesla’s then existing share price then rounding up to $420 because of the significance of that number in marijuana culture.” The SEC also accused that Musk did this to impress his musician girlfriend Grimes.
Musk sent an email to Bloomberg in which he termed the acts of the commission as “unjustified” and told he is felling “deeply saddened and disappointed.”
“I have always taken action in the best interests of truth, transparency, and investors,” he said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
Musk might not get away with this easily because Saudi funding was not secured at all. Musk might have to step down as well as he denied paying a nominal penalty and quit from the position of chairman for two years as part of a resolution proposed by the SEC, CNBC reported. Saudi Arabia’s sovereign wealth fund actually financed Lucid Motors to help them bring their first electric luxury sedan, the Lucid Air in the market.