Tesla CEO Elon Musk Slammed With Contempt Claim for Breaching SEC Agreement
- Author: David Armstrong Feb 27, 2019,
Feb 27, 2019, 1:41
"Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people", the SEC said in a filing with the US District Court for the Southern District of NY.
The SEC said it had investigated and found that Tesla had not vetted the first comment - distributed to Musk's 24 million followers and however many more who saw it retweeted - which it asserted was "inaccurate".
He later had to send a follow-up tweet indicating that the company will actually deliver just 400,000 cars this year. In tweets after the filing, Musk criticized the SEC and said it had overlooked comments he made on the company's January 30 earnings call that Tesla may make as many as 500,000 of its Model 3 sedans this year.
"I want to be clear: I do not respect the SEC", Musk told "60 Minutes" in December.
This is the latest event in a long-running battle between Musk and the SEC.
In a tweet last week, Musk said Tesla would produce 500,000 vehicles this year.
"A violation need not be willful in order to find contempt", the SEC wrote in its motion to U.S. District Court in the Southern District of NY, where the original judgment was filed.
Musk also agreed to legal approval regarding all tweets that may have a financial impact on Tesla.
The agreement also required Musk to step down from his post as Tesla's chairman and pay a $20 million fine.
When pressed how Tesla officials could know whether his tweets might be violating the SEC settlement if they were not readying them before they were posted, Mr Musk replied: "Well, I guess we might make some mistakes. But Musk's initial projection still may be considered a violation because the information could be considered material to Tesla shareholders - and the lawyers didn't see it before Musk sent it".
Last week Tesla CEO Elon Musk couldn't contain himself - he had to tweet about his electric auto company and how many cars it would make by the end of the year. "I do not have respect for the SEC", he said, adding that he respected the justice system.
"It's very clear that the SEC is not happy with Musk", said associate professor of law Stephen Diamond at Santa Clara University who specialises in corporate governance.
The case is SEC v. Musk, 18-cv-8865, U.S. District Court, Southern District of New York (Manhattan). "Who knows?" He added: "Nobody's ideal".