Elon Musk’s most recent jab at the SEC prompts a new reaction from Tesla shareholders

By Joey Klender

Posted on April 18, 2022

Elon Musk’s comments regarding the SEC’s investigation of his 2018 “funding secured” Tweet have prompted a new reaction from Tesla shareholders, who said in filings on Friday that a Federal Judge ruled the CEO’s communication as “false and misleading.”

In 2018, Tesla CEO Elon Musk was considering taking Tesla private at $420 per share. “Funding secured,” he said.

The Tweets were considered a violation of SEC standards, and Musk was accused of securities fraud and settled with the agency in a consent decree that the CEO is now trying to have thrown out.

On Thursday, Musk appeared at a TED event and was interviewed by the Head of TED, Chris Anderson. During the interview, Musk commented on the funding secured saga, stating that “Funding was indeed secured. “I should say, ‘Why do I not have respect for the SEC’ in that situation. I don’t mean to blame everyone at the SEC, but certainly the San Francisco office. The SEC knew that funding was secured,” Musk added. “They pursued an active public investigation, nonetheless.”

Elon Musk blasts the SEC for 2018 decree: ‘That’s like having a gun to your child’s head’

Musk went on to say that he was forced to agree to the terms of the consent decree, or banks would no longer let Tesla obtain working capital for business operations. “I was told by the banks that if I chose not to settle with the SEC, the banks would cease providing working capital, and Tesla would go bankrupt immediately. That’s like having a gun to your child’s head,” Musk said during the interview. “Those bastards.”

Following Musk’s comments Thursday, Tesla shareholders submitted a new filing the following day stating a federal judge ruled the CEO’s “funding secured” tweet as “false and misleading.” Shareholders included that on April 1, U.S. District Judge Edward Chen ruled the tweets were not true and that the court “held that he recklessly made the statements with knowledge as to their falsity,” according to a report from Reuters. 

In mid-March, Chen questioned the validity of the Tweets. “It seems to me it’s not factually very complicated,” Judge Chen said. “Funding had not been secured,” he added.

The shareholders said Musk “has used his fame and notoriety to sway public opinion in his favor, waging battle in the press having been defeated in the courtroom.”

Musk’s attorney throughout the ordeal, Alex Spiro, said to CNBC, “Nothing will ever change the truth which is that Elon Musk was considering taking Tesla private and could have.”

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Elon Musk’s most recent jab at the SEC prompts a new reaction from Tesla shareholders