The Securities and Exchange Commission has sued Tesla CEO Elon Musk for fraud, according to the court documents filed on Thursday. The law suit accuses Musk of ‘false and misleading’ statements about taking Tesla private at $420 per share. SEC further demanded a federal judge to keep Musk away from serving as an officer or a director of a public company, among other penalties.
"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.
"In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source," SEC further stated in its complaint.
Reports further suggest, Musk’s tweet and subsequent tweets has caused "significant confusion and disruption in the market for Tesla's stock," leading to a drop of more than 11% on the stock.
Responding to the same, Musk said in a statement to CNBC, "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."
Shareholders have also filed lawsuits accusing Musk of making the claim to manipulate the stock price.