By: Dowdy White, Fall 2018 IAC Student Intern
What if one simple tweet containing nine words could land you in a proceeding before the U.S. Securities and Exchange Commission and potentially cost you your job as the face as one of the most popular companies in the world? Even when you thought the tweet was just a joke? Well, we can ask Elon Musk how it feels.
On August 7, 2018, Musk tweeted the following message: “Am considering taking Tesla private at $420. Funding secured.” Though this tweet may have seemed to Musk like an innocent joke about smoking marijuana, which he publicly stated, this tweet went public to over 22 million of Musk’s followers on Twitter. According to a press release from the SEC, this tweet led Musk’s followers to believe that the transaction had been secured, and that the only remaining uncertainty was a shareholder vote.
Because of this misperception, an SEC complaint was filed against Musk. The SEC complaint alleges that Musk had not truthfully “discussed specific deal terms with any potential financing partners,” and he allegedly knew that the potential transaction was “uncertain and subject to numerous contingencies.” The complaint also stated that Musk’s tweets caused Tesla’s stock price to jump by over six percent on the day of the tweet, which raised Musk’s net worth to over $25 billion.
In response to Musk’s tweet and claim about the tweet being a mere joke, Steven Peikin, from the SEC’s Enforcement Division stated that “[c]orporate officers hold positions of trust in our markets and have important responsibilities to shareholders [and] an officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”
Musk was facing some pretty hefty charges from the SEC. He stood accused of violating antifraud provisions of federal securities laws and the SEC seeks to disgorge Musk and Tesla of their profits due to this tweet. The SEC also sought to prohibit Musk from serving as an officer or director of a publicly traded company.
When you send what you believe is a jovial tweet, you never expect such harsh backlash. However, it seems that Musk will be dealing with this tweet for a long, long time. His tweet took off like a rocket, man.
If you would like to learn more about the SEC’s complaint against Elon Musk and Tesla, please visit: