SEC lawsuit seeks to force Musk out as Tesla CEO and board member

Enlarge / Elon Musk speaks at the 68th International Astronautical Congress 2017 in Adelaide on September 29, 2017. (credit: PETER PARKS/AFP/Getty Images)

The Securities and Exchange Commission has sued Tesla CEO Elon Musk over an August tweet he made claiming he had "funding secured" to take Tesla private at $420 per share. The SEC says that this and subsequent tweets were false and misleading-and therefore a violation of market-manipulation laws.

The stakes are high. In addition to seeking financial penalties and an injunction against similar tweets in the future, the SEC is also seeking that Musk "be prohibited from acting as an officer or director" of companies that issue shares under Section 12 or Section 15(d) of federal securities laws. Stephen Diamond, a securities law expert at Santa Clara Law School, tells Ars that means Musk would have to step down as Tesla's CEO and give up his board seat.

In another tweet, the same day as his initial buyout tweet, Musk claimed that "[i]nvestor support is confirmed. Only reason why this is not certain is that it's contingent on a shareholder vote."

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