In September 2018, the U.S. Securities and
Exchange Commission ("SEC") charged Elon Musk, the former
Chairman of Tesla, Inc., with securities fraud. A series of
Tweets on Musk's personal page, the first of which read:
"Am considering taking Tesla private at $420. Funding
secured", caused share prices to instantly soar. In reality,
the potential transaction was uncertain and subject to a number of
contingencies. Market confusion and disruption ensued.
The SEC claimed Musk's tweets amounted to issuing false and
misleading statements and to a failure to properly notify
regulators of material events at Tesla. The action quickly settled,
with Musk agreeing to step down as Chairman of the Board of Tesla
for at least three years, and both Musk and Tesla paying a $20
million penalty each. Tesla was forced to agree to governance
reforms, including the establishment of a new committee of
independent directors to oversee the implementation of new policies
and procedures
