Tesla: Shares fall after regulators launch Musk lawsuit

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Tesla shares have sunk after US regulators took legal action against co-founder Elon Musk for alleged securities fraud.

On Thursday the Securities and Exchange Commission filed a lawsuit over claims made last month by Mr Musk that he had funding to take the company private.

The billionaire boss of the electric carmaker called the action unjustified.

But the filing was a potentially serious blow for the company, which was already under financial strain.

Mr Musk has led the electric carmaker as chief executive since 2008, presiding over its rise into a company with a market value that rivals Ford and General Motors.

His celebrity status and reputation for entrepreneurial vision attracted investors and legions of fans – even though the firm has consistently lost money and struggled to hit manufacturing targets.

Tesla’s shares closed 13.9percent lower. During the trading session on Friday, shares fell by 15 percent.

Now the SEC is seeking to bar Mr Musk from acting as an officer or director of a publicly traded company.

The move would strip him of his role at Tesla and could make it difficult for the firm to raise money at a critical moment for the company, which has been spending heavily to increase production of its latest car.

On Friday, the shares opened 10% lower as Wall Street investors reacted to the news.

“The mere possibility that Musk could be removed as chief executive (or entirely from Telsa) is likely to cast an overhang on the stock,” analysts for AllianceBernstein wrote.

 

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