The SEC could knock Elon Musk and Tesla (TSLA) out as shares drop

What could happen finally happened? The US Securities and Exchange Commission (SEC) has accused Elon Musk, Tesla (TSLA)’s CEO, of fraud and called for a ban on his management positions in a listed company after his August 2018 tweets deemed “false and misleading” on a possible buyback of the group followed by a delisting.

With a capitalization of more than USD 50 billion, the electric car manufacturer Tesla reportedly never discussed the funding of a buyback of its shares at USD 420 despite Musk’s tweet on August 7, 2018 speaking of “secured funding”.

Immediately, analysts and short sellers had suspected a possible maneuver of Elon Musk to artificially raise the share price, perhaps to finance a production that burns a lot of cash and lacks capital.

Exposed to a civil fine and other potential penalties from the SEC, Elon Musk said that “this unjustified action by the SEC leaves (him) deeply saddened and disappointed.” He added that he has “always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

While Musk is defending himself on the legal front, Tesla’s competitors, particularly German ones, are making rapid progress in their electric car production capacity.