Tesla investor sues Musk, claims tweets violate SEC settlement

Tesla investor sues Musk, claims tweets violate SEC settlement

News: Tesla investor sues Musk, claims tweets violate SEC settlement.

(Reuters) – Elon Musk, chief executive of Tesla Inc, has been sued by a shareholder who accused him of violating his 2018 settlement with the US Securities and Exchange Commission Twitter to use.

Shareholders have Musk’s “erratic” tweets and Tesla directors’ failure to ensure compliance with the SEC settlement, according to an unsealed complaint in the Delaware Chancery Court late Thursday that also named the electric car company’s board of directors Billions of dollars exposed to losses.

The complaint highlighted several Musk posts on the social media platform on Twitter, including its May 1 assessment that Tesla’s stock price was “too high”, causing Tesla’s market value to fall by more than $ 13 billion. Dollar led.

Chase Gharrity, the plaintiff, said Musk’s actions and directors’ inaction caused “significant financial damage” and that they should pay damages to Palo Alto, California-based Tesla for violating their fiduciary duties.

The lawsuit was filed despite the fact that Tesla’s share price has increased nearly five-fold since Musk’s “too high” tweet, giving Tesla a valuation of well over $ 600 billion, and the SEC has not publicly accused Musk of the recent violations.

“It could put pressure on the SEC to use some sort of recourse,” said Charles Elson, a professor at the University of Delaware and a specialist in corporate governance.

Tesla did not immediately respond to requests for comment on Friday. Gharrity’s attorneys, Musk’s attorneys on the SEC, and the SEC did not immediately respond to similar inquiries.

The SEC settlement followed Musk’s August 2018 tweet that he had “secured funding” to potentially take Tesla private in a $ 72 billion transaction. In reality, Musk wasn’t close.

Musk and Tesla each paid $ 20 million in fines, and Tesla’s attorneys agreed to pre-check some of Musk’s tweets.

The comparison was later changed to clarify when pre-approvals were required, prompted by an unverified tweet from Musk about Tesla’s vehicle production forecast.

In April last year, a federal judge in San Francisco said Tesla and Musk were facing a lawsuit alleging Musk’s private tweet cheated on shareholders. This case is still pending.

The case is Gharrity v Musk et al., Delaware Chancery Court, No. 2021-0199.

Reporting by Jonathan Stempel in New York, Hyunjoo Jin in San Francisco, and Chavi Mehta in Bengaluru; Adaptation by Sriraj Kalluvila and Rosalba O’Brien

Original Source © Reuters

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