Tesla CEO Elon Musk Slammed With Contempt Claim for Breaching SEC Agreement

Posted February 27, 2019

Since then, Musk and Tesla have each separately settled with the SEC for $20 million United States dollars (roughly, $26.3 million CAD), along with a few additional restrictions.

Musk, who initially on Monday accused the SEC of failing to read the company's annual reports, followed up with another tweet in the early hours of Tuesday.

Musk agreed to having future tweets that could affect Tesla's stock be pre-approved.

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.

Musk's legal troubles date to August 2018 when he publicly floated the idea of taking Tesla private, suggesting a share price and saying funding for the plan was "secured".

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Almost four and a half hours later, Musk clarified the tweet, saying that he meant that Tesla would actually be at a sustained production rate that meets its long-promised 10,000 vehicles per week goal. In its September lawsuit, the SEC said Musk hadn't discussed any specific deal terms with any funding partners and knew the potential transaction was uncertain.

In court papers filed in NY on Monday, the SEC said the tweet was inaccurate and in breach of Mr Musk's agreement. And the SEC argues the tweet ran afoul of an October settlement requiring Musk to seek pre-approval from Tesla lawyers before tweeting out potentially market-moving information.

The Musk tweet that prompted the SEC's court filing stated: "Tesla made 0 cars in 2011, but will make around 500K in 2019".

The agreement also required Musk to step down from his post as Tesla's chairman and pay a $20 million fine.

As part of that settlement, any material statements made by Mr Musk on social media were to be vetted by the company. In the first instance, it said, Tesla's policy is "clear and unambiguous" that re-approval must be sought again for any statement made more than two days after it was initially signed off.

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It added that Musk had said in a letter to SEC staff afterwards that he was "cognizant" of the procedures - so the error wasn't down to a lack of clarity in the terms.

This leads us to Musk's tweets on February 19th.

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

Musk got even more pointed in December, when he told 60 Minutes "I do not respect the SEC".

It's the latest in a series of ups and downs caused by Musk's Twitter habit.

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