Tesla boss Elon Musk 'deeply saddened' as he is sued for fraud by US regulator

Tesla's share price has gone into reverse after boss Elon Musk was told he is to be sued over remarks about potentially taking the electric car firm private.

The stock was trading more than 10% lower when America's financial markets opened on Friday for the first time since the US securities and exchange commission (SEC) accused him of fraud.

The share price fall meant more than $5bn had been lost from the electric car company's market value.

The billionaire entrepreneur said he was "deeply saddened" the SEC had filed the lawsuit alleged securities fraud.

In its complaint, the regulator says Mr Musk made a series of "false and misleading" tweets and he "knew or was reckless in not knowing" that he was misleading investors.

It also seeks to bar him from running public companies, which would include Tesla, as well as impose a fine.

Responding to the lawsuit, Mr Musk said: "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... and the facts will show I never compromised this in any way."

Mr Musk told his 22 million Twitter followers on 7 August that he might take Tesla private at $420 per share and that there was "funding secured".

In later tweets, he added that "investor support is confirmed" and a "special purpose fund" might be created for investors who stick with the California-based company.

But the SEC says Mr Musk had not discussed or confirmed key deal terms including price with any funding source.

Tesla's stock price increased by more than 6% from the time of Mr Musk's first tweet until the close of trading on 7 August and closed up 10.98% from the previous day, the regulator said.

Neil Wilson, chief market analyst at markets.com, said Friday's decline represented fears for the future among Tesla investors.

"Without Musk it's going to be hard to raise the kind of capital that is still required.

"Its future without Musk would be highly uncertain and the company could now become a target."

The lawsuit, filed in a federal court in Manhattan, makes Mr Musk one of the highest-profile executives to be accused by the SEC of securities fraud.

The SEC does not have criminal enforcement power.

Mr Musk, 47, is co-founder of Tesla and has served as chief executive since 2008.

Separately, the billionaire is being sued by a British diver who helped rescue boys trapped in a Thai cave after the Tesla chief called him a paedophile.

Vernon Unsworth claims Mr Musk defamed him with "unlawful, unsupportable and reprehensible accusations", according to court documents filed in California and seen by Sky News.