Musk defends ‘funding secured’ tweet as he fights SEC lawsuit
It took Elon Musk just over 24 hours to fight back.
The 47-year-old entrepreneur, accused by regulators of misleading investors in Tesla with an August tweet about taking the company private — thought he, indeed, had a verbal agreement with a deep-pocketed lender, according to a report Friday evening.
Musk and the lender, the Saudi Arabia sovereign wealth fund, were in talks to fund a plan to take the company private, The Wall Street Journal reported, citing one person familiar with the matter.
Tesla investors ran for the hills on Friday after the Securities and Exchange Commission accused Musk of misleading investors with an August tweet declaring he had “funding secured” for a $420 a share take-private deal.
Musk later backed away from the take-private move.
The SEC, in its suit, said Musk, when he made the Aug. 7 tweet, “knew that he had never discussed a going-private transaction at $420 per share with any potential funding source.”
But Musk seems ready to counter that allegation.
The SEC is looking to ban Musk, the heart and soul of Tesla, permanently from running a publicly traded company.
That possibility — real although far from being certain — spooked shareholders enough to send Tesla stock down 14 percent, to $264.77.
The free fall was accelerated when a report surfaced that Musk backed out of an eleventh-hour settlement offer from the SEC that called for only a two-year ban.
The offer, according to CNBC, which first reported on the proposed deal, would have also forced Tesla to appoint two independent board members.
The South African billionaire — who on Friday lost more than $78 million from his net worth — reportedly could not live with any blemish on his reputation or his company.
In a statement on Thursday, Musk said that the SEC lawsuit left him “deeply saddened and disappointed.”
“I have always taken action in the best interests of truth, transparency and investors,” Musk said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
Musk may have turned down the settlement because it would have made it harder to fight a criminal case, legal experts told The Post.
Tesla last week disclosed that it had received a request from the Justice Department for documents related to the now-infamous going-private tweet.
“Usually, if there is a criminal investigation, most people wait for that shoe to drop,” Thomas Gorman, a partner at law firm Dorsey & Whitney and a former SEC senior counsel, told The Post.
“If that’s out there, it may be a reason why Musk did this,” he continued, though he noted that the SEC often times waits for criminal prosecution before filing lawsuits of its own.
Gorman added that even if the SEC lawsuit moves forward without any interruption from Justice, it is difficult to see the regulator separating Musk from his company without doing damage to the electric-car maker.
CFRA Research analyst Garrett Nelson changed his rating on Tesla on Friday from hold to sell and lowered his price target to $225 from $265.