US Securities and Exchange Commission (SEC) filed a lawsuit against Musk on Thursday, alleging that Musk's tweets about taking Tesla private -- a plan he abandoned later -- had no basis in fact and caused market chaos that hurt investors. The regulator sought to ban Musk from running Tesla or any other company.
This SEC suit is the first fraud case involving use of social media by the CEO of a public company.
Musk, 47, tweeted on Aug. 7 that he was considering taking Tesla off the stock market and had "funding secured" for the privatization, which would value Tesla at 420 dollars a share. Tesla shares jumped after this tweet.
The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk's tweets.
The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.
Neither Musk nor Tesla admitted or denied the SEC's findings as part of the settlement.
Musk said on Thursday that the SEC's actions were unjustified. The often emotional and unpredictable CEO poses challenges for the Tesla board as they have to find an independent chairman to work closely with Musk.
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