Elon Musk Sued Over 420 Tesla Tweet
The federal government is suing Elon Musk.
The Tesla CEO has been accused of fraud in proposing last month to.
The Securities and Exchange Commission filed a complaint in federal court Thursday alleging Musk misled investors when he tweeted on Aug. 7 that he was considering taking the company private.
Musk made it seem "that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote," the complaint states. "In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source."
The filing alleged that—as many on Twitter had suspected—the share price target was a drug reference.
"According to Musk, he calculated the $420 price per share based on a 20% premium over that day's closing share price because he thought 20% was a 'standard premium' in going-private transactions," the complaint alleges.
"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 funny, which admittedly is not a great reason to pick a price.'"
Tesla stock dropped 9 percent in after-hours trading.