Federal securities regulators have sued Tesla CEO Elon Musk, alleging that the billionaire tech entrepreneur misled the market when he tweeted that he had “funding secured” to take the electric carmaker private.
The U.S. Securities and Exchange Commission filed a civil lawsuit on Thursday against Musk in federal court in Manhattan. Musk separately faces a criminal investigation into the episode, Bloomberg News reported this month.
Musk said on Twitter in August that he was considering taking Tesla private and that funding was “secured” for such a deal.
The SEC said in its suit that the comments were “false and misleading” because it was not nearly so certain that Musk would be able to pull the deal together.
“In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the enforcement agency said in the suit.
A representative for Musk was not immediately available for comment on the suit.
Tesla shares dropped sharply on news of the lawsuit, falling about 11 percent in a matter of minutes in after-hours trading.