A Tesla investor has sued the company’s board and Elon Musk, claiming Musk’s ‘erratic’ tweets violate an SEC settlement.
- A Tesla investor sued Elon Musk and the company board over the CEO’s “erratic” tweets.
- Musk’s tweets cost the company billions and violated an SEC settlement, the lawsuit alleged.
- In 2018, Tesla and the SEC agreed Musk’s tweets would need approval.
Elon Musk and the Tesla board are facing a lawsuit from an investor who alleged some of Musk’s comments on Twitter violated a settlement with the Securities and Exchange Commission meant to temper his communications.
Musk’s tweets have cost the electric-vehicle company “billions of dollars in market capitalization” and breached an agreement with the SEC, alleged the lawsuit, which was brought by the investor Chase Gharrity in Delaware and first reported on by Bloomberg Law.
In 2018, the SEC charged Musk with securities fraud for a tweet saying he would take Tesla private if the stock price hit $420. The parties came to a settlement, in which Musk was forced to step down as the company’s chairman and Tesla was required to put in place procedures to oversee Musk’s communications relevant to Tesla shareholders.
The new lawsuit, Bloomberg reported, alleged some of Musk’s tweets since then had been in violation of that agreement. The filing cited a May tweet from Musk’s verified account, which said: “Tesla stock is too high imo.” The stock price dropped almost 10% in the hours after the tweet.
“The Valuation Tweet was only one in a series of erratic tweets on this date from the same Twitter account,” the lawsuit, which was originally filed on March 8, said. “Musk’s wrongful conduct has caused, and will continue to cause, substantial harm to Tesla.”
The lawsuit also accused the board of failing to keep Musk’s comments in check.
Tesla did not immediately respond to Insider’s request for comment on the lawsuit.
Musk’s social-media presence has shown influence on everyday investors. In one recent study, about one-third of respondents said they made personal investments based on the CEO’s tweets, and another 16% said they’d made investments many times based on the tweets.