The Securities and Exchange Commission filed a lawsuit against Tesla CEO Elon Musk on Thursday, seeking his ouster from the publicly traded company he founded over a tweet the mogul sent in August.
What are the details?
The suit alleges that Musk lied to investors when he announced on social media on Aug. 7, he tweeted, "Am considering taking Tesla private at $420. Funding secured."
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk followed up with a series of tweets about the alleged plan, which caused investors to react and caused Tesla's stock price to shoot up nearly 11 percent from the previous day's close.
In the court filing, the SEC claims that "Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions."
The SEC further states that "Musk's false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla's stock and resulting harm to investors."
The feds are seeking relief in the form of civil penalties, and to have Musk booted from the top spot at Tesla. They are also seeking to prohibit him from heading any other publicly traded firm in the future.
But news of the SEC's lawsuit had a greater immediate reaction from investors than Musk's Aug. 7 tweets, with Tesla's stock tumbling more than 13 percent in after-hours trading.
How did Tesla respond?
In a joint statement, Tesla and its board reacted late Thursday, saying they "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," as reported by The Washington Post.
Musk released his own statement the same day, saying, "This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action 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."
On Friday, the Wall Street Journal's Tim Higgins warned that the SEC forcing Musk's exit "could spook investors enough to send the stock price spiraling, hurting Tesla's ability to raise the cash analysts say is required."
The SEC's lawsuit is the latest in a string of complaints against Tesla. CNBC reports that the Justice Department is also investigating Musk's take-private tweet, while the company faces multiple unrelated probes from OSHA, proposed class-action lawsuits from former employees and investors, and a National Labor Relations Board complaint.