Tesla shares crashed on Friday, a day after the U.S. Securities and Exchange Commission sued the electric-automobile company’s CEO Elon Musk over allegations of fraud.
Tesla stock was down nearly 14% at end-of-day trading on Friday to $264.77.
Investors appear to be concerned over the possibility that the lawsuit could result in the ousting of the charismatic Musk as Tesla CEO. The SEC alleges that Musk committed securities fraud by making misleading statements about the possibility of taking Tesla private.
Musk has denied the allegations, which stemmed from his Aug. 7 tweet in which he wrote “Am considering taking Tesla private at $420. Funding secured.”
“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said in a statement. “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.”
The SEC was willing to settle with Musk, but the executive’s lawyers rejected the agency’s proposition on Thursday, The Wall Street Journal reported.
Get Data Sheet, Fortune’s technology newsletter.
Bernstein Research analyst Toni Sacconaghi said in an analyst note on Friday that “In the absence of a settlement, the mere possibility that Musk could be removed as CEO (or entirely from Telsa) is likely to cast an overhang on the stock, and make it extremely difficult for the company to raise capital (either private or public).”
He added: “Ironically, the SEC brought suit against Musk personally to avoid damages having to be paid by Tesla shareholders, but the announcement wiped out $6B+ in market cap in yesterday’s aftermarket. In essence, Musk’s hand is being strongly pushed to come to the negotiating table—if he doesn’t settle, it could materially impede his growth plans and create an ongoing discount in the share price.”
