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US government cracks down on Tesla CEO Elon Musk for fraud

US government cracks down on Tesla CEO Elon Musk for fraud image

Anton Andres / Tesla | September 28, 2018 12:19

US Securities and Exchange Commission pursuing Tesla CEO Elon Musk for fraud

Tesla has been having a rough time as of late. There have been production issues for the Model 3, as well as spotty build quality in both the Model X and the aforementioned Model 3. Now, the US government is putting the company's CEO, Elon Musk, under the microscope.

The US Securities and Exchange Commission (SEC) has accused Musk of fraud and they are pursuing a case against him. The SEC says that Musk's actions have misled investors through his 'false public statements'. As a result, Tesla stocks have taken a tumble as well.

In the suit, the SEC seeks to remove Musk from his post as chairman and CEO of Tesla. The SEC stepped in when Musk said that additional funding has been secured for the company, as well announcing that private stocks are to be priced at $420 per share. According to reports, Musk's announcement blindsided investors, many stating that they were unaware of Musk's actions prior to the move to go private.

With that, the SEC has issued subpoenas to Tesla and other institutions which are said to help the automaker turn into a private company. The SEC is also conducting interviews on key Tesla personnel. On that note, it's only Musk who has been listed as the defendant in the case and not the entire company. As it is a civil case, the worst that could happen is Musk's ejection from Tesla and may be given a hefty fine. However, it is still possible that investors may pursue criminal charges against Musk.

Source: New York Times