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The U.S. Securities and Exchange Commission is suing Tesla CEO Elon Musk, alleging securities fraud a month after he announced that he planned to take the publicly traded electric-car company private.

Elon Musk has been accused of making false public statements that had the potential to hurt investors.

The first report that the SEC was looking into Musk's tweets about taking Tesla private came in early August. The tweet in question shown below, caused Tesla's shares to rise that day.

"Musk made his false and misleading public statements about taking Tesla private using his mobile phone in the middle of the active trading day", the SEC said in the complaint.

The SEC filing said funding was not secured because Musk had never discussed it with any potential financial sources, he had never investigated whether the "special goal fund" could be created, and he hadn't received "confirmed" support for the proposed transaction.

"In the complaint, filed in federal court in Manhattan, the SEC said Musk made "'false and misleading public statements and omissions" that harmed investors. In the lawsuit, Musk acknowledged that his price of $420 per share was roughly 20 percent over the closing price of Tesla stock, which would have been $419.

This is a breaking news story. The tweets, Thursday's complaint says, amount to a violation of antifraud provisions of the federal securities laws.

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The company's CFO begged Musk to put away his Twitter and explain the decision and update on the company's blog, according to Bloomberg. The lawsuit goes to says that the executive indicated "funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote".

Last month, Musk said during an interview with The New York Times that he wrote the tweet in his vehicle on the way to the airport and no one reviewed it.

On August 7 Mr Musk tweeted: "Am considering taking Tesla private at $420".

Tesla shares later plummeted as several executives quit following a webcast in which the CEO was filmed smoking marijuana and wielding a sword.

Stephanie Avakian, the SEC's co-director of enforcement, told reporters that Musk knew his statements lacked any basis in fact. The company did not immediately respond.

Tesla is yet to issue a statement about the SEC's case against Elon Musk.

You can read the entire SEC court filing below. As well, Nasdaq had stopped Tesla trading for more than an hour and a half.


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