A Tesla investor sued Elon Musk and the company’s board, saying the CEO’s “erratic” tweets violate an agreement with the United States Securities and Exchange Commission.
What happened: Investor Chase Gharrity filed a lawsuit at Delaware Chancery Court alleging that Tesla Inc (NASDAQ: TSLA) Musk continues to send “erratic tweets”, which violates an agreement with the United States Securities and Exchange Commission.
The lawsuit accuses Tesla’s board of failing to control Musk for sending tweets, even after SEC guidelines, causing “substantial damage” to the company, including billions of dollars in lost market capitalization, Reuters reported.
“Musk’s unlawful conduct” and “the failure of Tesla’s board to ensure compliance” caused “substantial damage” to the company, the suit said.
The lawsuit was originally filed on March 8.
Why does it matter: The suit cited Musk’s tweet in May 2020, where he mentioned “Tesla’s shares are too high”, which resulted in a loss of more than $ 13 billion in Tesla’s market value.
In 2018, Musk had to make a deal with the SEC after tweeting that it would make Tesla private in a $ 72 billion transaction. The SEC accused Musk of committing securities fraud.
So both Musk and Tesla agreed to pay $ 20 million each in the deal. According to the agreement, Tesla was instructed to follow the supervisory procedures related to Musk’s social media posts, including his tweets.
The SEC has not publicly accused Musk of recent violations, Reuters noted, and Tesla’s share price has skyrocketed by 534.59% over the past 12 months to $ 693.73, helping to boost the growth of ETFs that hold Tesla shares, how ARK Innovation ETF (NYSE: ARKK).
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.