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Musk Settles SEC Securities Fraud Charges Over "Funding Secured" Tweets (2018)

The SEC alleged that Musk's August 2018 statements that he could take Tesla private at $420 per share, with funding secured, were false and misleading because he had not discussed specific deal terms with any potential financing partner. Musk settled two days after being charged, without admitting or denying the allegations.

Record summary

Grade

Outside the grading scale: Pre-Office Conduct

International crime

Pre-office conduct — outside the official-power scale

Conduct from before office: Donald Trump’s before the June 2015 campaign launch, and an administration official’s before their first appointment or between terms. Scale and definitions

Status
Concluded
Legal status
Settled, no admission
Before Office
Elon Musk (all before-office records)
Incident date
Record updated
Category
Corruption & Self-Dealing
Legal posture
Documented
Verification
Cross-referenced
Sources
4 cited
Stable ID
elon-musk-sec-funding-secured-settlement-2018
Posture note
SEC civil enforcement action (S.D.N.Y. No. 1:18-cv-08865) resolved by consent settlement without admission or denial of the allegations.
Alleged responsible parties
  • Elon Musk, Chief executive officer and chairman, Tesla, Inc. (2018)— Tesla, Inc.

Key points

  • On August 7, 2018, Musk posted that he could take Tesla private at $420 per share and that financing was lined up
  • The SEC's complaint, filed September 27, 2018, alleged Musk had not discussed specific deal terms with any potential financing partners
  • Musk settled on September 29, 2018, without admitting or denying the SEC's allegations
  • Musk and Tesla each agreed to pay a $20 million penalty; Musk agreed to step down as Tesla's chairman and not seek re-election as chairman for three years
  • The case in the Southern District of New York was terminated on October 16, 2018; the court later approved a plan to distribute the penalties to harmed investors (March 25, 2022)

What happened

On August 7, 2018, Elon Musk, then chief executive and chairman of Tesla, posted to his roughly 22 million followers that he could take Tesla private at $420 per share, that financing was lined up, and that only a shareholder vote remained.

The Securities and Exchange Commission charged Musk with securities fraud on September 27, 2018. Its complaint alleged that Musk "had not discussed specific deal terms with any potential financing partners" and knew the transaction was uncertain and subject to many contingencies.

  • Proceeding: SEC v. Musk, No. 1:18-cv-08865, U.S. District Court for the Southern District of New York (civil enforcement action under the Securities Exchange Act).
  • Outcome: Settled on September 29, 2018, "without admitting or denying the SEC's allegations." Musk agreed to pay a $20 million penalty, to step down as Tesla's chairman, and not to be re-elected chairman for three years. Tesla, charged separately, also paid $20 million. The settlement was subject to court approval; the docket shows the case terminated on October 16, 2018, and an order of March 25, 2022 approved the plan to distribute the penalties to harmed investors.
  • No court adjudicated the fraud allegations.

Sources

  • U.S. Securities and Exchange Commission, "Elon Musk Charged With Securities Fraud for Misleading Tweets," press release 2018-219, September 27, 2018.
  • U.S. Securities and Exchange Commission, "Elon Musk Settles SEC Fraud Charges; Tesla Charged With and Resolves Securities Law Charge," press release 2018-226, September 29, 2018.
  • SEC v. Musk, No. 1:18-cv-08865 (S.D.N.Y.), docket record via CourtListener.
  • Emma Bowman, "Elon Musk settles with SEC, agrees to step down as Tesla chairman," NPR, September 30, 2018.

Update log

  1. Added for the Before Office record. Musk first joined the administration on January 20, 2025.

Sequence of events

  1. "Funding secured" posts

    Musk posts that he can take Tesla private at $420 per share and that financing is lined up.

  2. SEC charges Musk

    The SEC files a securities fraud complaint against Musk in the Southern District of New York.

  3. Settlement announced

    Musk settles without admitting or denying the allegations: a $20 million penalty and removal as Tesla chairman for three years. Tesla separately settles a related charge and pays $20 million.

  4. Case closed

    The district court case is terminated following the settlement.

Sources

  1. Elon Musk Charged With Securities Fraud for Misleading Tweets — U.S. Securities and Exchange Commission
  2. Elon Musk Settles SEC Fraud Charges; Tesla Charged With and Resolves Securities Law Charge — U.S. Securities and Exchange Commission
  3. SEC v. Musk, No. 1:18-cv-08865 (S.D.N.Y.), docket record — CourtListener (Free Law Project)
  4. Elon Musk settles with SEC, agrees to step down as Tesla chairman — NPR (via WHYY)

How this record was published

Manually curated This entry was added directly and does not carry an automated audit trail.

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