Elon Musk is coming under fire for yet another tweet. On the heels of settling a case with the U.S. Securities and Exchange Commission (“SEC”) this fall (and agreeing to pay $20 million, as well as relinquish his chairman title) for a “misleading” tweet, in which he told his 22 million Twitter followers that he was “considering taking [publicly-listed] Tesla private at $420. Funding secured,” Musk is facing SEC scrutiny again – for yet another tweet.
As of Monday, the SEC, the U.S. government agency tasked with regulating the nation’s stock and options exchanges, asked a U.S. federal court to hold Musk in contempt for allegedly violating last year’s settlement with the agency. In accordance with his settlement with the SEC in September, the 47-year old South African billionaire agreed to get pre-approval from the company, where he holds the CEO title, before publishing future tweets that contain “material information” about the company to ensure that they are, in fact, “accurate or complete.”
Now, less than 6 months after the speedy settlement, which was announced within 48 hours of the SEC announcing that it had filed suit against Musk in a New York federal court, the SEC has asserted that a new tweet – one from February 19, in which Musk stated, “Tesla made 0 cars in 2011, but will make around 500k in 2019” – is not only misleading to investors but was not pre-approved by Tesla. Musk followed his initial tweet about the company’s manufacturing estimate for the year with one that stated, “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k,” prompting government attention.
“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 asserted in its filing on Monday. “Musk has thus violated the Court’s Final Judgment by engaging in the very conduct that the pre-approval provision of the Final Judgment was designed to prevent.”
The recent tweets “raise new a round of regulatory issues for the embattled Tesla Inc. CEO,” per Bloomberg, with the SEC asserting that Musk has not “made a diligent or good faith effort” to comply with the settlement, something that Musk has not been shy to discuss since. In an interview with 60 Minutes in December, Musk stated, “The only tweets that would have to be … reviewed would be if a tweet had a probability of causing a movement in the stock. Otherwise, it’s — hello, First Amendment. Like freedom of speech is fundamental.”
He further revealed to the program’s Lesley Stahl that he wanted “to be clear,” stating that he does not “respect” the SEC.
All the while, Musk is still embroiled in a investor-initiated lawsuit in a federal court in San Francisco stemming from his August 2018 tweet, with the Tesla investor plaintiffs seeking to get information from Musk’s ex-girlfriend, Claire Elise Boucher, who goes by the stage name, Grimes, and fellow musician Azealia Banks, the latter of whom alleged in subsequent social media posts that Musk was using drugs at the time of the tweet that boosted stock prices for the NASDAQ-traded Tesla.
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