SEC Sues Elon Musk Over Tesla Tweets
STEVE INSKEEP, HOST:
Elon Musk, the CEO of the electric car company Tesla, is being sued by the Securities and Exchange Commission, the SEC, all of which started with a tweet. NPR's Jasmine Garsd reports.
JASMINE GARSD, BYLINE: On August 7, Elon Musk tweeted that he was thinking of taking Tesla private at $420 a share. That sent Tesla's stock skyrocketing. Problem is, Musk didn't actually have any firm backers to go private.
JAMES COX: This cost several people and institutions hundreds of millions of dollars.
GARSD: Professor James Cox specializes in corporate and securities law at Duke University.
COX: We don't want prominent executives making statements about their company that have no factual basis.
GARSD: Musk backed down on the plan and kept Tesla a publicly traded company. The SEC didn't let it go. It's now coming after Musk for allegedly misleading investors. The lawsuit says Musk set the share price at $420 on a whim because he had recently learned the number's significance in marijuana culture and thought his girlfriend would find it amusing.
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ELON MUSK: I mean, it's legal, right?
JOE ROGAN: Totally legal.
GARSD: It's not such a bizarre allegation, given Musk's recent behavior, like when he recently went on comedian Joe Rogan's podcast and apparently smoked pot. The interview had some strikingly sad moments, like when Musk stared blankly into space and talked about the pressures he's under.
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MUSK: I don't think you'd necessarily want to be me.
GARSD: Investors were worried. Gene Munster works at Loup, a venture capital company that follows Tesla. He says the last couple of months...
GENE MUNSTER: To call it a roller coaster is an understatement.
GARSD: In the lawsuit, the SEC seeks that Musk be barred from serving as an officer or director of a public company. Munster says that's what many investors have wanted all along. He'd like to see Musk as a chief visionary.
MUNSTER: Where he doesn't have investor-relations responsibilities. After what happened today, I think it's less likely because the SEC really is out for blood here.
GARSD: It's a tough spot for the company. To many devoted fans, Tesla is inextricably linked to the charismatic and innovative Elon Musk.
ERIK GORDON: A real fundamental question here is, do we have a real company, or do we have Elon Musk Incorporated?
GARSD: Erik Gordon is a professor at the Ross School of Business at the University of Michigan.
GORDON: Through all of these sort of troubles and shenanigans with Musk, the company has said, well, yeah. But he needs to be CEO. He probably can't be CEO anymore, so they're going to have to change their tune, and they're going to have to convince investors that the company is OK without him as CEO.
GARSD: In a public statement following the lawsuit announcement, Elon Musk called the SEC's actions unjustified. He wrote, quote, "I have always taken action in the best interests of truth, transparency and investors." Jasmine Garsd, NPR News, New York.
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