US watchdog accuses Elon Musk of securities fraud

Elon Musk is facing strong allegations from the securities watchdog. Photo/File.

The US Securities and Exchange Commission has filed a lawsuit alleging that Tesla chief executive Elon Musk committed securities fraud.

The Securities and Exchange Commission says in the complaint filed Thursday that Musk falsely claimed in an August 7 statement on Twitter that funding was secured to take the company private at $420 per share.

In the lawsuit filed in the US District Court in Manhattan, the watchdog says that Musk had, in fact, made no such plans.

"In truth and in fact Musk had not even discussed much less confirmed key deal terms, including price, with any potential funding source," it says.

The commission is asking the court for an order stopping him from making false and misleading statements along with repayment of any gains as well as civil penalties.

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

Tesla stock rose 5 per cent immediately after the announcement on Twitter.

Musk previously argued that taking the company private would free the electric car maker to focus on long-term goals, rather than the quarterly concerns of Wall Street.

Musk detailed his proposal in a blog post on the company's website Tuesday, hours after stunning the company's followers by casually tweeting that he might take it private.

Musk complains that Tesla is "the most shorted stock in the history of the stock market" and many people "have the incentive to attack the company."

Following his claims that he was planning to take the company private, regulators suspended trading in the company's stock.

- Additional reporting from Associated Press