- A Tesla investor sued Elon Musk and the company’s board over the CEO’s “erratic” tweets.
- Musk’s tweets cost the company billions and violated a SEC deal, the suit alleged.
- In 2018, Tesla and the SEC agreed that Musk’s tweets would need approval.
- See more stories on the Insider business page.
Elon Musk and Tesla’s board are facing a lawsuit by an investor who alleged that some of Musk’s comments on Twitter violated an agreement with the Securities and Exchange Commission to moderate his communications.
Musk’s tweets cost the electric vehicle company “billions of dollars in market capitalization” and violated an agreement with the SEC, the suit alleged, which was filed by investor Chase Gharrity in Delaware and first reported by Bloomberg Law.
In 2018, the SEC accused Musk of securities fraud by tweeting that he would make Tesla private if the stock price reached $ 420. The parties reached an agreement, in which Musk was forced to step down as president. company and Tesla was required to establish procedures to oversee Musk communications relevant to Tesla shareholders.
The new lawsuit, Bloomberg reported, claimed that some of Musk’s tweets have since breached the agreement. The suit cited a May tweet from Musk’s verified account, which said, “Tesla’s stock is too high.” The stock price fell by almost 10% in the hours after the tweet.
“The Valuation Tweet was just one in a series of erratic tweets on this date from the same Twitter account,” said the lawsuit, which was originally opened on March 8. “Musk’s illicit conduct has caused, and will continue to do, substantial damage to Tesla.”
The lawsuit also accused the council of not keeping Musk’s comments under control.
Tesla did not immediately respond to Insider’s request for comment.
Musk’s presence on social media has shown an influence on daily investors. In a recent study, about a third of respondents said they made personal investments based on the CEO’s tweets, and another 16% said they made investments often based on the tweets.