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Regulation

Elon Musk accused by SEC of misleading investors in August tweet

Elon Musk, CEO of Tesla Inc.

Tesla Inc. CEO Elon Musk was accused by the Securities and Exchange Commission of misleading investors when he tweeted that he had funding lined up to take the company private.

The agency said Mr. Musk fabricated the claim in his August tweet, which sent Tesla shares higher.

"In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source," the SEC said in complaint filed Thursday in Manhattan federal court, less than two months after Mr. Musk's tweet.

Shares fell about 10% in after-hour trading on news of the lawsuit. The company didn't immediately respond to a request for comment. The SEC has scheduled a press conference for 5 p.m.

Even before the tweets, the SEC was investigating issues at Tesla including its car sales projections. The Justice Department is also looking into whether Mr. Musk misled investors, Bloomberg News has reported.

"Musk made his false and misleading public statements about taking Tesla private using his mobile phone in the middle of the active trading day," the SEC said. "He did not discuss the content of the statements with anyone else prior to publishing them to his over 22 million Twitter followers and anyone else with access to the internet. He also did not inform Nasdaq that he intended to make this public announcement, as Nasdaq rules required."

The suit seeks an order barring Mr. Musk from serving as an officer or director of a public company, a request often made in SEC lawsuits. The suit doesn't name Tesla as a defendant.