Elon Musk's 'funding secured' tweet cost him $40M and his chairmanship

On August 7, 2018, Elon Musk tweeted: 'Am considering taking Tesla private at $420. Funding secured.' Tesla's stock jumped about 11% and trading was briefly halted. But no financing had actually been arranged — Musk had only held preliminary talks with Saudi Arabia's Public Investment Fund, and there was no term sheet, no committed capital, and no board-approved deal. The $420 price, he later said, was chosen as a premium to the market — and, as he acknowledged, a nod to cannabis culture.

The Securities and Exchange Commission sued Musk for securities fraud, alleging the statement was false and misleading and seeking to bar him from serving as an officer of a public company. Two days after the complaint, Musk settled without admitting or denying the allegations. He and Tesla each paid a $20 million penalty — $40 million in total — and Musk agreed to step down as Tesla's chairman for at least three years, though he remained CEO.

The settlement also pushed Tesla to put controls on Musk's communications: a 2019 follow-on agreement listed the topics his posts needed pre-clearance on. Musk has said he does not regret the tweet. In February 2023, a jury in a separate shareholder lawsuit found Musk and Tesla not liable over the same tweet — but the SEC settlement and its $40 million in penalties stood. The case remains the canonical example of how a single social-media post can become a securities-law event.