Thursday, the Securities and Exchange Commission announced that it was charging Elon Musk, in his capacity as Tesla’s CEO, with securities fraud “for a series of false and misleading tweets” that Musk issued in August in which he claimed to be taking Tesla private at $420 per share. Among the penalties the SEC requested in its civil suit against Musk is that Elon Musk, the man of a million companies, perhaps the most notable was that he be “prohibited from acting as an officer or director” of a public company. Three days later, on September 29, the SEC announced that the organization had reached a settlement with Musk and Tesla. Among the terms of the settlement, Musk will resign as Tesla’s Chairman but will remain CEO, pay a $20 million fine, and Tesla has pledged to “put in place additional controls and procedures to oversee Musk’s communications.”
There may be good cause for such stipulations: SEC records obtained exclusively by The Outline through a Freedom of Information Act request show that Elon Musk’s tweets prompted a flurry of complaints from frustrated investors, many of whom attributed their losses directly to the actions of Musk himself.
In July, according to the SEC’s complaint, Musk met with representatives of the Saudi Arabia sovereign wealth investment fund about possibly taking Tesla private, but per the SEC, “Musk acknowledged that no specific deal terms had been established” and that “Musk did not communicate with representatives of the Fund again about a going-private transaction until August 10, three days after his August 7 statements.” Even still, Musk told Tesla’s Board of Directors that he had an offer to take Tesla private at $420 per share, in part, according to the SEC’s complaint, “because he had recently learned about the number ’s significance in marijuana culture and thought his girlfriend ‘would find it funny.’”
Over the next week, he then discussed the possibility of taking Tesla private with private equity investors. Despite them telling him it wasn’t a realistic idea, Musk fired up his thumbs and tapped out his now-infamous tweet announcing that he was “considering taking Tesla private at $420.” As the complaint notes, he sent the tweet on a Tuesday, in the middle of the trading day, causing Tesla’s stock price to jump six percent as he waved away concerns on his Twitter that what he was planning to do is basically impossible.
Overall, the complaint doesn’t make Elon Musk out to be some sort of business villain. Instead, he comes across as a person with a huge ego whose unrealistic expectations caused him to claim that he was going to do an impossible thing, only to realize the impossible thing was impossible and then scramble behind the scenes to make the lie come true. Billionaires are people, and people are complicated and often act like assholes. And some billionaires, especially ones who are named Elon Musk, maybe shouldn’t be in charge of public companies.
The SEC alleges that Musk’s itchy Twitter fingers “caused market chaos and harmed Tesla investors” — both people who bought Tesla stock after Musk’s going-private tweet only to find out they’d been misled, as well as Tesla short-sellers who got burned by the rapid market action that only occurred because Elon Musk tweeted a thing. (Notably, per the Wall Street Journal, Musk made a “last-minute decision” to reject a settlement that would have stopped the suit from being filed.)
According to consumer complaints sent to the SEC, Musk’s August 7 tweet did indeed cause all hell to break loose. These complaints are notable because they express many of the same concerns regarding Musk’s actions as the SEC’s lawsuit, providing a snapshot of the overwhelming frustration felt by small investors with Musk, as well as an overall concern that the American financial system places individuals at a stark disadvantage. Some are unsympathetic, some are funny, and others — such as the person who has a large portion of their retirement riding on their Tesla investment — are just sad. View a selection below:
Read through two full batches of consumer complaints, totaling 147 pages, provided to The Outline by the SEC below.
[Update: This story has been updated to reflect the settlement between the SEC and Tesla and Elon Musk.]