Tesla's Musk ready to fight SEC suit but could settle

NEW YORK • Tesla's chairman and CEO Elon Musk could settle with US regulators who have sued to remove him from the electric carmaker's leadership, but he is prepared to fight the securities fraud suit against him, sources said last Friday as shares in the company plunged about 14 per cent.

The cost of insuring Tesla debt against default rose to its highest ever last Thursday and the plummeting share price attracted new short sellers. Short sellers notched up US$1.27 billion (S$1.74 billion) last Thursday alone in paper profits, according to S3 Partners.

The US Securities and Exchange Commission (SEC) accused Mr Musk last Thursday of tweeting false and misleading information in August about financing for his now-abandoned plan to take the company private, and said it was seeking to remove him as an officer or director. The billionaire entrepreneur said he had done nothing wrong and the company's board said it supported him.

The Wall Street Journal last Friday reported that Mr Musk believed he had a verbal deal for financing from Saudi Arabia's sovereign wealth fund to take Tesla private.

The SEC in its suit said the meeting between Mr Musk and the fund "lacked discussion of even the most fundamental terms of a proposed going private transaction".

Mr Musk, 47, walked away from a settlement that would have required him to give up key leadership roles at the company for two years and pay a nominal fine, according to reports last Friday. But sources told Reuters that while Mr Musk was ready to go to trial, he could still settle.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on September 30, 2018, with the headline 'Tesla's Musk ready to fight SEC suit but could settle'. Print Edition | Subscribe