An investor in Tesla sued Elon Musk and the company’s board, saying the CEO’s “illegal” tweets violated a settlement with the U.S. Securities and Exchange Commission.
What happened: Investor Chase Gharrity has filed a lawsuit with the Delaware Chancery Court alleging that it Tesla Ing (NASDAQ: TSLA) Musk continues to send “volatile tweets” that violate a settlement with the U.S. Securities and Exchange Commission.
The case accuses Tesla’s board of directors of not controlling Musk over the sending of the tweets, even after the SEC directives, which caused the company ‘significant damage’, including billions of dollars’ lost market capitalization, Reuters reported.
“Musk’s wrongful conduct” and “the failure of Tesla’s management to comply” caused “significant damage” to the company, the lawsuit states.
The case was originally filed on March 8.
Why it matters: The case quoted Musk’s tweet in May 2020 stating that ‘Tesla’s share is too high’, leading to a loss of more than $ 13 billion in Tesla’s market value.
In 2018, Musk had to settle with the SEC after tweeting that he would take Tesla privately in a $ 72 billion deal. The SEC has accused Musk of committing security fraud.
Then Musk and Tesla agreed to pay $ 20 million each into the settlement. Under the agreement, Tesla was instructed to follow surveillance procedures regarding Musk’s social media posts, including his tweets.
The SEC has not publicly accused Musk of recent violations, Reuters noted, and Tesla’s share price has risen 534.59% to $ 693.73 over the past twelve months, helping to boost growth in ETFs holding Tesla shares possess, to arouse, as ARK Innovation ETF (NYSE: SHEETS).
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