USA government sues Elon Musk, may be removed as Tesla boss

30 September, 2018, 01:00 | Author: Manuel Hopkins
  • Musk's Tesla position uncertain as US regulators sue Musk for fraud

Fox News contributor Gary Kaltbaum weighs in on the SEC's lawsuit against Tesla CEO Elon Musk, who they accused of making "false and misleading" statements about taking the company private.

Tesla's 5-year credit default swap TSLA5YUSAX=MG hit its highest price ever on Friday, the day after the U.S. Securities and Exchange Commission said it was suing Musk and pushing for his ouster.

"As demonstrated by the stock's reaction, investors believe the removal of Musk from Tesla would be negative for the prospects of the company, despite his recklessness in the go-private tweets". CEO of misleading investors with his infamous tweet last month about taking the electric-car maker private. Musk has blamed short-sellers, investors betting on a collapse in a company's share price, for Tesla's woes.

Tesla has now plunged 30 percent from its closing price August 7, the day of Musk's "funding secured" tweet.

Tesla and its board "are fully confident in Elon, his integrity, and his leadership of the company", directors said in a joint statement Thursday.

Musk stated on Thursday that the SEC's allegations were "unjustified" stating: "I have always taken action in the best interests of truth, transparency and investors".

Barclays said there was a $130 "Musk premium" in Tesla's share price, such is his influence.

"Elon's presence at the top of the company isn't required to maintain Tesla's brand equity", he said.

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Federal prosecutors are rec commending Musk - who reportedly pulled out of a deal with the SEC to avoid a guilty plea at the last minute -pay a penalty and are seeking to bar him from running a public company in the United States.

Musk, Tesla's chairman and chief executive, has been directly involved in nearly every detail of its product development and technology strategy, and is credited as the driving force behind the loss-making company's ability to raise capital.

Over the past 24 hours, Elon Musk has been the subject of heavy public spotlight thanks to a lawsuit that accuses the billionaire of defrauding stockholders with said Tweet. Tesla's board, which includes Musk's brother Kimbal Musk, is closely aligned with the CEO.

"Usually, if there is a criminal investigation, most people wait for that shoe to drop", Thomas Gorman, a partner at law firm Dorsey & Whitney and a former SEC senior counsel, told The Post.

Johnson says the suit only confirms what he's been saying for a while now, and that it will force investors to actually focus on the company's fundamentals.

That might have been dismissed, but the stock surged in the wake of the news, because Musk also added: 'Funding secured'.

For the billionaire entrepreneur, it was the latest self-inflicted wound from a series of auto crashes that have battered Tesla's share price and Musk's reputation. That's putting intense pressure on Musk and the board to stop the bleeding.

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