Tesla’s Musk may settle SEC lawsuit

SAN FRANCISCO: Tesla Inc’s Elon Musk could settle with U.S. regulators who have sued to remove him from the electric carmaker’s leadership, but he is prepared to fight the securities fraud lawsuit against him in court, sources said on Friday as shares plunged about 14 percent. Musk, Tesla’s chairman and chief executive, has been directly involved in almost every detail of its product development and technology strategy, and is credited as the driving force behind the loss-making company’s ability to raise capital.

The cost of insuring Tesla debt against default rose to its highest price ever on Thursday and the plummeting share price attracted new short sellers, who bet against the stock. Short sellers notched $1.27 billion Thursday alone in paper profits, according to S3 Partners, which said Tesla recently regained the title of most-shorted U.S. stock.

The U.S. Securities and Exchange Commission (SEC) accused Musk on Thursday of tweeting false and misleading information in August about financing for his now-abandoned plan to take the company private, and said it was seeking to remove him as an officer or director. The billionaire entrepreneur said he had done nothing wrong and the company’s board said it supported him.

The Wall Street Journal on Friday, citing a person familiar with the matter, reported that Musk believed he had a verbal deal for financing from Saudi Arabia’s sovereign wealth fund to take Tesla private.

Musk last month in a blog said he left a July 31 meeting with the fund’s managing director “with no question that a deal with the Saudi sovereign fund could be closed.”