Updated: Tesla CEO Elon Musk has stepped down as chairman of the Silicon Valley company and has settled the SEC lawsuit for $55 million where he was being accused of fraud.

Musk is being sued by the US Securities and Exchange Commission for making false and misleading statements on his Twitter account about taking the publicly listed company private.

The SEC is seeking to remove Musk as an officer or director of a public company and to pay civil penalties.

The filing made September 27 said his statements falsely indicated he could take Tesla private at a price that reflected a substantial premium over what the company’s stock actually was.

The SEC argues Musk had not even discussed or confirmed any of the deal terms, including price, with any funding source.

His tweets were posted on August 7 where Musk said, “Am considering taking Tesla private at $420. Funding secured.”

“My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla.”  

“Shareholders could either to [sic] sell at 420 or hold shares & go private.”  

“Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.”

Once the tweets were published on August 7, Tesla’s stock price grew 6 per cent on a significant increase volume and closed up 10.98 per cent from the day before.

Tesla’s current stock price is at US$307.52 down 0.67 per cent.

In a statement to CNBC Musk said, “This unjustified action by the SEC leaves me deeply saddened and disappointed.

“I have always taken action in the best interests of truth, transparency, and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

Elon Musk and girlfriend Grimes at the 2018 Met Gala

On August 28 in a blog post, Tesla announced Musk would no longer be considering taking the company private, “Elon communicated to the Board that after having done this work and considered all factors, he believes the better path is to no longer pursue a transaction for taking Tesla private.”

The SEC said Musk chose the price of $420 to impress his then girlfriend musician Grimes as he just learned the significance of the number 420 in marijuana culture.

He was quoted, “[She] would find it funny, which admittedly is not a great reason to pick a price.”

CNN has reported shareholders have also filed lawsuits claiming Musk made the statements to “manipulate the stock price”.

Musk has been seen exhibiting “erratic behaviour” over the past months, some of his abnormal actions include calling one of the Thailand cave rescuers a “pedo guy” and was seen smoking marijuana live during a podcast with Joe Rogan which subsequently caused Tesla’s stock price to plummet.

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