Earlier this year Tesla CEO Elon Musk Tweeted his plan to take Tesla private at a price of $420 per share. But despite denying that the "$420" figure was chosen for the popular cannabis reference, a lawsuit issued by the United States Securities and Exchange Commission (SEC) on Thursday claims otherwise.
Over the past 24 hours, Elon Musk has been the subject of heavy public spotlight thanks to a lawsuit that accuses the billionaire of defrauding stockholders with said Tweet. Stock prices rose nearly nine percent following Musk's announcement of securing privatization funding, resulting in the SEC opening an investigation to ensure that the CEO was in accordance with his legally required fiduciary duties.
Rumors swarmed about why that particular number was chosen, the most common of which was due to it being a number popularized in cannabis culture. Musk denied, stating that it was just a beautification technique to make Tesla's 20 percent share increase look a bit more appealing.
"It seemed like better karma at $420 than at $419," Musk said in an interview with the New York Times. "But I was not on weed, to be clear. Weed is not helpful for productivity. There's a reason for the word 'stoned.' You just sit there like a stone on weed."
Much like he predicted, the worst was yet to come. Thursday, the SEC filed suit against Musk after the CEO reportedly declined to settle with the agency outside of the courtroom. Later that day, the SEC held a press conference where co-director of enforcement Steven Peikin spoke specifically to reference the significance of Musk's chosen share buyback number.
"We allege that Musk had arrived at the price of $420 by assuming a 20 percent premium of what Tesla's then existing share price (was), and then rounding up to $420 because of the significance of that number in marijuana culture, and his belief that his girlfriend would be amused by it," said Peikin during the conference.
Meanwhile, Tesla shares continued to plummet in after-hours trading, falling over 15 percent from its daily high of $312 to its lowest denomination of $265.
Musk feels that the actions from the SEC are unjust and Tesla's board is standing behind its CEO. Earlier in the month, the CEO had toked cannabis with comedian Joe Rogan during an interview, which doesn't aide in dispelling the SEC's accusations.
“This unjustified action by the SEC leaves me deeply saddened and disappointed," Musk said in a statement provided to The Drive. "I have always taken action in the best interests of truth, transparency, and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
Musk has at least two other ongoing lawsuits; one filed by a British cave diver he called a "pedo" and another by various shareholders who claim that the above-mentioned Tweet was a method of defrauding investors.
“This past year has been the most difficult and painful year of my career,” said Musk earlier this year. “It was excruciating.”
Well, it appears it's only going to get worse.