Tesla's Elon Musk calls SEC 'broken' in new Twitter spat

Wednesday, 27 Feb, 2019

The United States Securities and Exchange Commission (SEC) says a federal court should hold Elon Musk in contempt for violating last year's settlement with the federal agency due to new statements made on Twitter, sending shares of the electric carmaker down 5 per cent in extended trade.

A spokesperson for the company did not immediately respond to requests for comment.

In that interview, Musk revealed that no one at Tesla was screening the tweets he posts to his account, which now has 25 million followers.

Now the SEC is alleging that Musk broke the terms of that agreement with a February 19 tweet projecting that Tesla would make about 500,000 cars this year. A few hours later, the billionaire CEO clarified to say the company's annualised production rate by end-2019 would probably be around 500,000, and that only 400,000 will be delivered.

This means that the lawsuit implies that the SEC is looking for the judge to re-rule the settlement with more restrictions or a stronger set of rules regarding Musk's tweets.

The tweets in question concern Musk discussing Tesla's estimates for automobile production volumes this year.

Indeed, there's no indication that even after the settlement took effect that Musk has "sought or obtained" Tesla's approval of any of his tweets before he posted them, the SEC said. His tweet followed a report suggesting Saudi Arabia became a major Tesla shareholder earlier in 2018. The terms of the agreement require the CEO not to post controversial tweets, which could influence investors' attitudes, without pre-approval by the company's management.

Musk agreed to step down as Tesla's chairman, and both he and Tesla agreed to pay $20 million civil fines.

It also is not clear how Musk's public criticism of the SEC might weigh on his fate.

Criticizing the SEC is nothing new for Musk. However, in December he revealed on the USA edition of 60 Minutes that that nobody is approving his tweets.

The SEC added that Musk's claim to be restating comments in the call "is not credible" because the information in the two missives was "obviously different".

The case is SEC v. Musk, 18-cv-8865, U.S. District Court, Southern District of New York (Manhattan).

And in a December interview with CBS's "60 Minutes", Musk said he did not have respect for the SEC.

"While Musk claims to 'respect the justice system, ' his deliberate indifference to compliance with this court's final judgment indicates otherwise", the agency said.