New York, Sep 28: The Securities and Exchange Commission (SEC) has filed a lawsuit against Elon Musk, the founder and CEO of Telsa Inc for making 'misleading' and 'false' statements, including tweets, about taking his company private at $420 per share. The SEC alleged that Elon Musk had picked $420 as the share price because it is a reference to pot culture, and to 'amuse' his girlfriend.
According to the filing, Elon Musk claims he calculated the $420 price point based on a 20 per cent premium on the day's closing share price, which resulted in a price of $419 per share. "Musk stated that he rounded the price up to $420 because he had recently learned about the number's significance in marijuana culture and thought his girlfriend would find it funny, which admittedly is not a great reason to pick a price," the filing reads.
The lawsuit seeks to bar Musk from serving as an executive or director of publicly traded companies like Tesla, reports The New York Times. The accusations come less than two months after Musk posted his tweet on August 7 announcing that he was considering taking Tesla private at a price of $420 per share. "Am considering taking Tesla private at $420. Funding secured," Musk had tweeted.
In his response, Musk called the move unjustified. "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," the billionaire businessman said in a statement. Telsa's share tumbled more than 12 per cent after SEC filed lawsuit against Musk.
The lawsuit is a fresh trouble for Tesla and Musk. The company has been struggling to achieve the ambitious production targets that Musk had publicly outlined. He has made a series of unusual public comments or appearances, including an internet interview in which Musk appeared to smoke marijuana. (With IANS inpputs)