Published: Wed, February 27, 2019
Markets | By Erika Turner

SEC Says Tesla Chief Elon Musk's Tweets Violated Court Settlement

SEC Says Tesla Chief Elon Musk's Tweets Violated Court Settlement

The Securities and Exchange Commission (SEC) asked a judge Monday to hold Tesla CEO Elon Musk in contempt for violating the terms of an agreement requiring the company to pre-approve his tweets.

A Tesla representative declined comment on the SEC filing.

The issue is a series of tweets from Musk on February 19 about Tesla's production numbers.

But the cult of personality has also had a downside for Tesla, with Musk sending the stock into a tailspin after antics such as smoking marijuana during a podcast interview or insulting analysts on a conference call.

After Musk's previous Twitter saga, where he said he was considering taking Tesla private and had "funding secured", he was told to get approval from Tesla before tweeting important company information.

The SEC cites the message tweeted by Musk on February 19 about Tesla's plans to manufacture 500,000 vehicles this year.

In a promptly-posted follow-up tweet, Musk backtracked and said the company will actually deliver just 400,000 cars this year.

The SEC's move puts Musk in legal peril once again.

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In September, a group of investors and Tesla shareholders filed a class-action lawsuit, accusing Tesla and Musk of trying to "burn" investors with "objectively false tweets".

That followed his Monday night tweet, after the contempt motion was filed, that the "SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k", and added: "How embarrassing". In the settlement, Musk kept control of Tesla, but he was stripped of the title of board chairman and ordered to pay a $20 million fine.

The SEC also pointed out that during the same interview, Musk declared: 'I want to be clear.

We reached out to the SEC for more information. When pressed how Tesla officials could know whether his tweets might be violating the SEC settlement if they weren't readying them before they were posted, Musk replied: 'Well, I guess we might make some mistakes.

"Musk's claim that he thought he was simply restating information from the January 30 communications is not credible", the agency said.

Even beyond last week's tweets, Musk hasn't been making a "good faith" effort to comply with the settlement agreement, the agency said. "I do not respect them". For all the reasons stated, the SEC respectfully requests that the Court enter an order to show cause why Defendant Elon Musk should not be held in contempt of the Court's October 16, 2018 Final Judgment.

Now it's up to the justice system to decide whether to take Musk to task over an ill-turned tweet.

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