• The SEC has named Elon Musk in a lawsuit, according to Bloomberg.
  • The regulator has been investigating Musk and his company, Tesla, for months.

 The SEC is suing Elon Musk for making "false and misleading statements" and wants to bar him from helming a public company.

The suit accuses him of making false or misleading statements about taking Tesla, his electric car company, private for $420 a share, a claim he tweeted to his 22 million followers on August 7th. Shares fell as much as 10 percent in after hours trading on the news.

The SEC suit claims that Musk's tweet about taking Tesla private was "false and misleading" and goes on to say that Musk continued to make false and misleading statements on Twitter followers for hours -- one of them being:

"Investor support is confirmed. Only reason why this is not certain is this is contingent on a shareholder vote."

The SEC says that these tweets caused market chaos, and harmed investors.

From the complaint:

Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions. When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a "special purpose fund," and had not confirmed support of Tesla's investors for a potential goingprivate transaction

After Musk's initial tweet, Tesla share rose 6 percent.

Reports that the SEC subpoenaed Tesla over the Musk's tweet surfaced mere days after he tweeted, on August 15th.

Musk also tweeted that he had "funding secured" for such a deal, and that the only step left in the process was getting investor approval.

A few weeks later, though, Tesla announced that it would not go private in a late night Friday press release. Musk explained that funding for the deal had in fact not been secured, and that discussions stalled in their early stages.

"After considering all of these factors, I met with Tesla's Board of Directors yesterday and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree," Musk wrote.

--This post originally appeared on  Business Insider

Published on: Sep 27, 2018