The Securities and Exchange Commission (SEC) on Thursday filed a lawsuit against Tesla CEO Elon Musk on the charges of securities fraud, alleging he made “false and misleading” tweets about a potential transaction to take the company private.

In its complaint, filed in federal court in the Southern District of New York, SEC seeks ban on Musk from being able to hold officer or director positions at publicly-traded companies, as well as any other damages the court feels are appropriate, The Verge reported.

On August 7, Musk tweeted that he was considering taking Tesla private at $ 420, adding “funding secured”. “I am considering taking Tesla private at $420. Funding secured,” the tweet read.

The SEC’s complaint alleges that “in truth, Musk had not discussed specific deal terms with any potential financing partners, and he allegedly knew that the potential transaction was uncertain and subject to numerous contingencies.”

According to the SEC, Musk’s tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.

“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division, in an official release.

“An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly,” Peikin added.


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