Published: Sun, October 07, 2018
Markets | By Josh Butler

Tesla shares fall after Musk trolls U.S. securities watchdog

Tesla shares fall after Musk trolls U.S. securities watchdog

Musk stirred nerves about a settlement of his securities fraud lawsuit by calling the SEC the "Shortseller Enrichment Commission" on Twitter, just hours after a federal judge ordered him and the regulator to justify their settlement. Musk responded by further bullying short sellers on Twitter.

The SEC declined to comment to CNBC news on Musk's tweet.

Musk has frequently sparred with short sellers who have bet against the company, and his tweet suggests he believes the SEC acted to benefit his enemies.

Tesla shares declined by more than 2 percent to $274.50 in extended trading after Musk's tweet.

Musk's latest tweet, which appears to be missing a word, did little to reassure investors who have endured volatility in Tesla's stock caused by his public comments.

His crime? An August tweet in which he falsely claimed to have "funding secured" for a buyout of Tesla at $420 a share.

This pushed the SEC to sue Musk for securities fraud as the agency alleged "Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source". "As citizens of planet earth, we must show our support for innovation, for attempting to create a positive future and for our fearless change agent of the world, Elon Musk", the website states. "It's what they do", he said of the SEC. As the settlement is still under review, it will be interesting to see whether the SEC may try to review its stance due to the implication that the agency is acting under the desire to enrich investors and not in the interest of fairness.

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Musk came up with a startling announcement that he has considered de-listing the company from the stock exchange.

Musk's tweet came the same day that Judge Alison Nathan, a US District Court judge in NY, requested a joint letter explaining why she should approve the tentative settlement deal between Musk and the Securities and Exchange Commission.

Musk, 47, agreed to step down as chairman within 45 days and be replaced with an independent director.

Musk doubled down on the tweet shortly after.

"I do not think there is any serious chance of the settlement being rejected, based on 2nd Circuit precedent", Pritchard added.

On Thursday, the judge in the case requested a joint letter from Musk and the SEC explaining why the court should approve the settlement.

In court papers and at a news conference, the regulator went to great lengths to spell out Musk's carelessness and erratic behavior, highlighting his threat earlier this year to "burn" investors betting against Tesla stock.

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