Elon Musk faces securities fraud investigation
Elon Musk has again found himself on the front pages of newsstands around the world, with the Securities and Exchange Commission filing a lawsuit accusing him of price manipulation.
If you have been following Mr Musk’s recent exploits this news won’t come as a surprise, as back in August he announced via his Twitter plans to taking Tesla off the stock market and into private ownership. Catching everyone off-guard, he claimed to have the funds suggesting an initial price of US$420 a share.
When pushed on this estimate, he said the calculation was based on a 20% premium over that day's closing share price because he thought 20% was a "standard premium" when purchasing companies private transactions. The actual figure from this model yielded a price of US$419, to which he rounded up as a nod to his indie singer girlfriend who had recently told him it had significance in marijuana culture.
As you would imagine this isn’t the kind of business practice that sits too well with investors or more importantly the Securities and Exchange Commission. They released a statement saying: "In truth and in fact Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source".
Mr Musk has been quick to defend his position claiming: "I have acted in the best interests of truth, transparency and investors".
"Integrity is the most important value in my life and the facts will show I never compromised this in any way," he stated.
Despite his recent outburst on Twitter, his attack on a British diver in Thailand who refused his help and his public consumption of cannabis, Tesla's board of directors say they will still back him stating: "We have full confident in Elon, his integrity and his leadership of the company".
The Securities and Exchange Commission will look to seeking financial penalties for Mr Musk, and until he can justify the stock market confusion garnered through his statements then he could be facing a difficult road ahead.