Tesla (NASDAQ:TSLA) shares were down 11% in after hours movement after the U.S. Securities and Exchange Commission filed a lawsuit against founder and CEO Elon Musk. The suit alleges that Musk misled shareholders when he claimed on Twitter that he had funding for a corporate buyout.



The SEC is reportedly seeking to bar Musk from serving as an officer or director of a U.S. public company. "This unjustified action by the SEC leaves me deeply saddened and disappointed," Musk said in a statement after the news broke. Tesla and its board of directors issued a formal vote of confidence in Musk in their own statement.



Is has been a tumultuous year for the visionary Tesla founder. Musk was embroiled in several controversies that were outside the company’s boundaries. Shares took a hit recently after Elon Musk smoked cannabis on a popular YouTube podcast.



The SEC lawsuit put Musk in an extremely difficult position. Musk’s tweet indicated that he had financing only to reveal later that he did not.



This would appear to put the SEC on strong footing to remove Musk as Tesla enters a crucial period in its production. Some analysts have warned that a Tesla without Musk would have difficulty raising funds. It is likely that the company will become an attractive acquisition target, especially as larger auto manufacturers are aggressively pushing into the electric car market.



Tesla stock holders and prospective buyers will want to watch proceedings closely in the coming weeks.