Tesla shares fell more than 4 percent Thursday after CEO Elon Musk mocked the Securities and Exchange Commission (SEC) on Twitter Thursday — an eyebrow-raising move which came after the increasingly erratic billionaire reportedly reached a no-guilt settlement with the financial watchdog last week over his infamous “funding secured” tweet but before the settlement was finalized by a judge.
Hours after a request from a federal judge asking Musk and the SEC to justify their September 30 settlement, Musk tweeted, “Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!”
Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!
— Elon Musk (@elonmusk) October 4, 2018
In a brief statement to CNN, the agency said, contrary to Musk’s tweet, it had not changed its name.
As Breitbart News reported, Tesla and Musk were ordered to pay a total of $40 million in fines to the SEC and its founder while 45 days to step down as chairman of the embattled electric car company as part of the settlement deal with the agency. At first, Musk reportedly turned down a deal with the watchdog because the move would “not be truthful to himself,” nor would he been able to “live with the idea that he agreed to accept a settlement and any blemish associated with that.”
“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors.” Stephanie Avakian, co-director of the SEC’s Division of Enforcement said of the settlement: “The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors.”
Despite the agreement, the legal headaches faced by Musk and Tesla are far from over. In September, Citron Research editor and short seller Andrew Left filed a lawsuit against Musk for violating federal securities laws. A copy of the legal complaint accuses Musk of falsely stating funding to take Tesla private had been secured to manipulate the company’s stock price in an effort to damage short sellers’ position. “This appears to be a textbook case of fraud,” Michael Canty, an attorney representing Left, said in a statement. “We believe Musk attempted to manipulate the price of Tesla securities with false and misleading tweets, in a directed effort to harm short-sellers.”
Investors Kalman Isaacs and William Chamberlain sued Tesla in a federal court in San Francisco in August, claiming the erratic billionaire purposely boosted the company’s share value as part of a scheme to wipe out short sellers. “It is clear that Defendant Musk Tweeted materially false and misleading information regarding the Going Private Transaction to exact personal revenge and ‘squeeze-out’ the short-sellers who had purportedly been badgering him for months,” the lawsuit reads.