The US regulator has brought charges against Tesla chief executive Elon Musk over tweets that he was going to take his car company private.
The Securities & Exchange Commission has alleged the tweets were "false and misleading" after Mr Musk's attempts to take Tesla private with Saudi funding came to nothing.
The complaint, filed in a federal district court in New York, alleges Mr Musk violated anti-fraud provisions of federal securities laws and seeks to prohibit him from serving as an officer or director of a public company.
Mr Musk has refuted the allegations and called the SEC's actions "unjustified", while saying he has always acted in the best interests of "truth, transparency and investors".
In August Mr Musk tweeted to his 22 million followers that he had "funding secured" for a deal to take Tesla private at a price of $420 (£321) a share and he later revealed he would partner with the sovereign wealth fund of Saudi Arabia to achieve this.
But he later opted to abandon these plans, saying shareholders had told him the company would be better off on the public market.
The SEC alleges this gave the impression the only remaining uncertainty was a shareholder vote but in truth Mr Musk had not discussed specific deal terms with any potential financing partners.
It also alleges Mr Musk knew the potential transaction was uncertain and subject to numerous contingencies.
Steven Peikin, co-director of the SEC’s enforcement division, said: "Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders.
"An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly."
The SEC highlighted that Mr Musk's tweets had caused Tesla’s stock price to jump by more than 6 per cent on 7 August and led to "significant market disruption".
Tesla has said it is "fully confident" in Mr Musk and his "integrity and leadership".
The second-largest shareholder in Tesla is Baillie Gifford, with the company's £7bn Scottish Mortgage trust a major backer of the car manufacturer.
But in recent months Mr Musk appears to have tried the patience of the trust's manager, James Anderson.
Last month Mr Anderson wrote to Mr Musk in protest at the Tesla founder's comments on the rescue of children from a cave in Thailand.
Mr Musk later apologised for this, but has since returned to the issue and questioned why the rescuer had not sued him if the allegation was false.
damian.fantato@ft.com
