Tesla stock tumbles after Musk’s swipes at SEC, short sellers

Tesla Inc. shares slid Friday in the wake of Chief Executive Elon Musk appearing to mock the U.S. Securities and Exchange Commission and renewing his criticism of short sellers less than a week after reaching an agreement with regulators on fraud charges.

Tesla stock TSLA, -6.47% fell over 6%% in midday trade, and traded as low as $262.62 earlier in the session. It was the worst-performing stock on the Nasdaq 100NDX, -1.74%on the day, and poised to lose ground on the week, despite soaring 17% on Monday.

Musk on Twitter Thursday appeared to take a swipe at the SEC, calling it the “Shortseller Enrichment Commission.”

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Musk also said short sellers, who bank on a stock falling in price, are “value destroyers.”

Also read: Short sellers are not evil, but they are misunderstood.

Musk and regulators reached an agreement on Saturday to end SEC charges that he misled investors and violated securities laws by tweeting Aug. 7 that he had “funding secured” to take Tesla private. The settlement has yet to be court-approved.

See also: Judge wants Musk, SEC to justify settlement

Musk and Tesla agreed to settle the charges against them without admitting or denying the SEC’s allegations. As part of the settlement, Musk and Tesla agreed to pay $20 million each, and Musk agreed to step down as Tesla’s chairman for three years.

Terms of the deal also require Tesla to impose controls to oversee Musk’s social-media communications. It is unclear when Tesla intends to implement that part.

The company did not immediately return a request for comment.

Musk’s behavior was “obnoxious” and SEC staff is probably not happy about it, yet Musk’s tweets are unlikely to cause the SEC to rescind its agreement because Musk did not outright deny the SEC allegations in the original complaint, said Andrew Vollmer, a law professor at the University of Virginia.

“I don’t view the tweets I read as a denial,” said Vollmer, who served as SEC deputy general counsel.

Tesla stock rose 17% on Monday, the first trading day post-settlement agreement and after Musk over the weekend reportedly told Tesla employees the company was on the verge of turning a profit.

Shares wobbled again, however, on Tuesday after the company reported third-quarter delivery and production numbers that beat expectations. So far this year, Tesla shares have lost 15.5%, which contrasts with advances of 7.8% for the S&P 500 index SPX, -0.84% and 6.8% for the Dow Jones Industrial Average. DJIA, -0.98% 

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