The SEC is suing Elon Musk for securities fraud, and to make matters worse for him, they are seeking his removal from Tesla:
Securities regulators on Thursday sued Elon Musk for fraud and sought to remove him from Tesla Inc., raising doubts about the future of an electric-car maker synonymous with the audacious entrepreneur.
The SEC’s lawsuit—sparked by Mr. Musk’s August comments that he had lined up funding for a corporate buyout—seeks civil penalties against Mr. Musk and asks a court to bar him from being the officer or director of a public company.
“These misleading statements, none of which were pre-cleared or reviewed by anyone at Tesla, caused significant market confusion and disruption,” said Steven Peikin, the SEC’s co-director of enforcement.
The move by the Securities and Exchange Commission amounts to one of the most high-profile actions against a corporate executive in recent years. It sued Mr. Musk in Manhattan federal court, alleging he “had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” according to the lawsuit. U.S. law forbids public-company executives from making false statements or misleading investors about information that is material to an investment decision.
The claims against Mr. Musk caps a year of incredible turmoil for the auto maker, which has struggled to boost production of the Model 3 sedan—Tesla’s bet that it can bring electric cars to the masses through a more affordable car.