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Illustration: Sarah Grillo/Axios

U.S. securities regulators have sued Elon Musk for allegedly making false statements related to his abandoned efforts to take Tesla Motors private.

Why it matters: Musk could be barred from serving as CEO of Tesla, or even as a director on its board. The prospect sent Tesla's stock down more than 10% in after-hours trading, representing over $5 billion in lost market cap.

The SEC specifically alleges that Musk lied when he tweeted on August 7 that he had "funding secured" for a takeover of the company at $420 per share. From the complaint:

"This statement was false and misleading. Over the next three hours, Musk made a series of additional false and misleading statements via Twitter."

Musk allegedly never discussed the $420 price with any funding source prior to the public tweet. Instead, he got there by calculating a 20% premium to where the stock was trading in early August, and then adding an extra dollar because "420" is associated with marijuana and he allegedly thought "his girlfriend would find it funny."

In a statement, Musk said called the SEC's suit an "unjustified action:"

"This unjustified action by the SEC leaves me deeply saddened and disappointed. 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."

Tesla and its board of directors provided the following statement:

“Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful US auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees.”

Tesla is not named as a defendant, although the SEC did not rule out that future possibility during a press conference. It also is theoretically possible that the US. Department of Justice could eventually file criminal charges.

Go deeper

Dion Rabouin, author of Markets
40 mins ago - Economy & Business

How GameStop exposed the market

Illustration: Eniola Odetunde/Axios

Retail traders have found a cheat code for the stock market, and barring some major action from regulatory authorities or a massive turn in their favored companies, they're going to keep using it to score "tendies" and turn Wall Street on its head.

What's happening: The share prices of companies like GameStop are rocketing higher, based largely on the social media organizing of a 3-million strong group of Redditors who are eagerly piling into companies that big hedge funds are short selling, or betting will fall in price.

Caitlin Owens, author of Vitals
1 hour ago - Health

Who benefits from Biden's move to reopen ACA enrollment

Photo: Chip Somodevilla/Getty Images

Nearly 15 million Americans who are currently uninsured are eligible for coverage on the Affordable Care Act marketplaces, and more than half of them would qualify for subsidies, according to a new Kaiser Family Foundation brief.

Why it matters: President Biden is expected to announce today that he'll be reopening the marketplaces for a special enrollment period from Feb. 15 to May 15, but getting a significant number of people to sign up for coverage will likely require targeted outreach.

3 hours ago - Technology

Big Tech bolts politics

Illustration: Eniola Odetunde/Axios

Big Tech fed politics. Then it bled politics. Now it wants to be dead to politics. 

Why it matters: The social platforms that profited massively on politics and free speech suddenly want a way out — or at least a way to hide until the heat cools.