Elon Musk reportedly backed out of SEC deal at the last second

Musk said in a blog post he had been approached by the Saudi Arabian sovereign wealth fund multiple times about investing in Tesla, making him confident he would be able to secure the funds needed to take the company private at his price of $420 per share.

Shares in Tesla Inc dived 11% after USA regulators accused chief executive Elon Musk of fraud and sought to remove him from his role in charge of the electric vehicle company. The lawsuit also wants to prevent Musk from being an officer of any public company. He specifically said he would consider doing so at $420, adding that funding had already been secured.

The SEC's lawsuit, filed in Manhattan federal court, caps a tumultuous two months set in motion on August 7 when Musk told his more than 22 million Twitter followers that he might take Tesla private at US$420 per share, with "funding secured". "This calculation resulted in a price of $419, and Musk stated that he rounded the price up to $420 because he had recently learned about the number's significance in marijuana culture and thought his girlfriend "would find it amusing, which admittedly is not a great reason to pick a price". "Integrity is the most important value in my life and the facts will show I never compromised this in any way".

Some analysts said SEC's action was the beginning of a legal battle with authorities, short-sellers and other investors over Musk's actions that could cost Tesla heavily.

Tesla had disclosed on September 18 that the U.S. Department of Justice was investigating Musk's public statements on the go-private plan.

Shares in Tesla are expected to plummet following the announcement.

Gordon Johnson, an analyst at Vertical Group who has been predicting a collapse in Tesla's shares for months, is less optimistic. According to Gene Munster, a managing partner of venture capital firm Loup Ventures, there's about a 25 percent chance Musk remains Tesla's CEO. The department of justice too is now looming into Musk's tweets and could bring a criminal case if it finds he deliberately misled investors.

"Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful US auto company in over a century". Musk recently appeared to be smoking marijuana in a video clip that has been widely circulated.

"I think it was a big mistake to turn down the settlement offer", CFRA analyst Garrett Nelson said.

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