SEC Wants Tesla CEO Elon Musk Held in Contempt for Violating Tweet Agreement, Report Says
The Securities and Exchange Commission asked a federal court in Manhattan to hold Tesla CEO Elon Musk in contempt, citing Musk’s tweets last week about the electric-vehicle manufacturer’s production levels, the Wall Street Journal reported.
The tweets in question concern Musk discussing Tesla’s estimates for automobile production volumes this year. The Journal said that the SEC maintained in a court filing that those tweets violated a previous settlement between Musk and the agency.
Musk’s Twitter feed shows three tweets posted on Feb. 19. In one, Musk shared an aerial photo of what he claimed showed 4,000 Tesla vehicles about to load on a San Francisco dock for shipment to Europe. In a comment to his own tweet, Musk said, “Tesla made 0 cars in 2011, but will make around 500k in 2019.”
In Tesla’s letter to shareholders last month, the company offered a production forecast at odds with Musk’s 500,000 figure. “In total, we are expecting to deliver 360,000 to 400,000 vehicles in 2019,” the letter read.
Four and a half hours after his initial tweet about 2019 production levels, Musk posted another reply to his own tweet. “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,” he wrote.
Last September, the SEC filed a lawsuit accusing Musk of making “false and misleading” statements on Twitter about his plans for taking Tesla private. The SEC and Tesla settled the lawsuit a month later in an agreement that left Tesla free from charges of fraud but which required Musk to step aside as the company’s chairman and for him and Tesla to each pay a a $20 million fine.
The settlement also asked Tesla to “undertake a number of corporate governance measures specifically tailored to prevent future violations of the type alleged by the SEC here.” In other words, Tesla must preapprove any statements Musk makes about the company on Twitter that could affect its stock price.
Musk posted his tweet about 2019 production rates at 4:15 PM Pacific time on Feb. 19. Tesla’s stock fell 1% to $302.56 a share the following day.
Around the time that the SEC filed its request for a contempt order Monday against Tesla’s CEO, Musk posted two more cryptic tweets, which may or may not address his feelings about the action.
Tesla did not respond immediately to a request for comment on the reported lawsuit.
Tesla’s stock was down 5% in after-hours trading Monday following the news.