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Tesla Inc. CEO Elon Musk has been charged by a shareholder who accused him of violating his 2018 settlement with the Securities and Exchange Commission over his Twitter use.
According to a lawsuit filed late Thursday in the pulpit court in Delaware, which also names the board of directors of the electric car company as accused, Musk is ‘unlawful’ tweets and the failure of Tesla’s directors to ensure compliance with the SEC settlement exposed shareholders to billions of dollars in losses.
The complaint highlighted several Musk posts on the social media platform Twitter, including its May 1 assessment last year that Tesla’s share price was ‘too high’, causing Tesla’s market value to tumble more than $ 13 billion.
Plaintiff Chase Gharrity said Musk’s actions and the directors’ actions caused “significant financial damage” and that they should pay damages to Palo Alto, Tesla, California, for violating their fiduciary duties.
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The case has been filed, even though Tesla’s share price has risen nearly fivefold since Musk’s ‘too high’ tweet, giving Tesla a valuation of more than $ 600 billion, and the SEC has not publicly accused Musk of recent violations not.
“It could put the SEC under pressure to appeal,” said Charles Elson, a professor at the University of Delaware and a corporate governance specialist.
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Tesla did not immediately respond to a request for comment. Gharrity’s attorneys, Musk’s attorneys in the SEC case and the SEC did not immediately respond to similar requests.
The SEC settlement follows Musk’s tweet in August 2018 that he was ‘funded’ to possibly make Tesla private in a $ 72 billion deal. In fact, Musk was nowhere near.
Musk and Tesla each paid $ 20 million in civil fines, and Tesla attorneys agreed to vet Musk’s tweets beforehand.
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The settlement was later amended to explain when pre-approval was required, followed by an undoubted tweet by Musk about Tesla’s forecast for vehicle production.
Last April, a federal judge in San Francisco said Tesla and Musk should face a lawsuit alleging that Musk’s persistent private tweet has fraudulent shareholders. That case remains pending.
The case is Gharrity v Musk et al., Delaware Chancery Court, no. 2021-0199.