Published: Sun, October 07, 2018
Finance | By Gustavo Carr

'Shortseller Enrichment Commission’? Musk mocks SEC over fraud probe

'Shortseller Enrichment Commission’? Musk mocks SEC over fraud probe

Shares of Tesla Inc fell 7 percent on Friday, as David Einhorn's hedge fund Greenlight Capital slammed the electric carmaker the day after Tesla CEO Elon Musk mocked the U.S. Securities and Exchange Commission on Twitter.

In a tweet referring to the SEC as "Shortseller Enrichment Commission", Musk wrote sarcastically that the regulator was "doing incredible work".

Both Tesla and the SEC did not respond to requests for comment by FOX Business. In another tweet, Musk also criticized short-sellers, saying, "Short-sellers are value destroyers". "Why would they be upset about their mission?"

"The SEC stayed away [from] the broader corporate governance and management issues", Turner said.

About 40 minutes later, he doubled-down on the tweet and apologized for the typo in the original post. The SEC alleged that Musk hadn't locked up the estimated $25 billion to $50 billion that it would have required to pull off that deal, and wanted to punish him by forcing him out as Tesla's CEO.

Tesla and Musk reached a settlement with regulators on Saturday, where they agreed to pay $20 million each to financial regulators and the billionaire will step down as chairman but remain as CEO.

Tesla Chief Executive Elon Musk has been making headlines for all the wrong reasons in the past few months, and one activist investor thinks it's because he's trying to sabotage his own job.

Tesla shares are on track for their fourth consecutive daily decline and are down about 9.5 per cent this year.

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Under those agreements, which still have to be approved by a federal court, Tesla agreed to replace Musk with an independent chairman and to name two new independent directors.

Musk said on Twitter.

"The last several years have taught me that they are indeed reasonably maligned", he tweeted, before adding, "What they do should be illegal".

"It is the essence of free speech. But just for SEC enforcement action, particularly with a big fine, it's unusual".

"He may have not had the intent to violate securities laws, but his tweet shows that he is happy to cost an investor money". "It's just plain bad taste".

At the time, short-sellers, who make a profit by borrowing shares, selling them and then buying them back at an expected lower price, claimed to have lost millions thanks to Mr Musk's comments. Tesla stock dropped 2 percent in after-hours trading after Thursday's tweet.

U.S. District Judge Alison Nathan in Manhattan said her regular practice is to have parties submit a joint letter, in this case by October 11, to show why their settlement was fair and reasonable and would not hurt the public interest.

But the settlement still needs court approval.

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