Elon Musk Accused of Violating Securities Fraud Settlement
It’s been an interesting year for Elon Musk, the Tesla chief executive officer who rose to fame as a leading voice in the tech sector.
In the last 12 months, he made a head-scratching appearance on Joe Rogan’s podcast, announced the company was closing physical stores in favor of internet sales, and flirted with a plan to take Tesla private. Musk’s decision to ruminate on the last move via social media generated a securities fraud suit from the federal government. Now lawyers for the Securities Exchange Commission say Musk violated a settlement agreement in that case by talking too much on Twitter.
SEC lawyers want a federal judge to hold Musk in contempt after he tweeted that Tesla is on track to make about 500,000 cars this year. They said that he pledged to steer clear of tweets that could sway the company’s stock price. But attorneys for Musk say the government agency is infringing on this First Amendment free speech rights by trying to put a muzzle on his quite active Twitter account.
Musk first landed in hot water with the feds in August, when he tweeted that he was “considering taking Tesla private at $420” and that he already had the “funding secured” for the move. That made of a chaotic day of trading in which Tesla stock ultimately ended up some 11 percent.
The SEC brought a securities fraud case against Musk, arguing that he knew at the time of the tweet that funding for any such deal was still uncertain and that a number of contingencies could stop it from happening. Musk agreed to step down as the company’s chairman and he and Tesla each pledged to pay $20 million apiece to settle lawsuit.
Legal Protections for Investors
The Musk situation is a good example of new investment fraud concerns posed by social media. Powerful tools like Twitter and Facebook can help spread inaccurate and incomplete information spread quickly. That puts investors at risk of making decisions without all of the facts.
Fortunately, there are a number of legal protections for investors who have been victimized by fraud. That includes the option of filing a class action lawsuit against the perpetrators. These lawsuits allow the victims for investor and other types of fraud to join together to seek compensation from those responsible.
Speak With a Securities Attorney
If you or a loved one has been the subject of securities fraud, it’s important to seek counsel of an experienced securities attorney. A seasoned lawyer can help you weigh your rights and options, including whether to start, join or opt out of a class action lawsuit.
At Glancy Prongay & Murray, our securities attorneys have been representing people in securities, consumer and other fraud cases for more than 25 years. We have a strong track record of success in these cases. Call us at (310) 201-9150 or contact us online to speak with an attorney today.