In a court filing sent to a federal judge on Thursday, Tesla accused the U.S. Securities and Exchange Commission (SEC) of harassing the electric-vehicle maker’s outspoken CEO, Elon Musk, and trying to “chill” Musk’s right to free speech.
“The SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government,” Tesla’s attorney Alex Spiro wrote in the letter to Judge Alison Nathan, who oversaw a 2018 settlement between Tesla and the SEC.
“The SEC’s outsized efforts seem calculated to chill his exercise of First Amendment rights rather than to enforce generally applicable laws in evenhanded fashion,” the letter said.
Musk certainly is a vocal critic of the government. Most recently, Musk lambasted the National Highway Traffic Safety Administration (NHTSA) for forcing Tesla to disable a “boombox” feature that allowed cars to play music through external speakers. The NHTSA said the feature was a safety risk; Musk called the NHTSA the “fun police.”
On Thursday, the NHTSA revealed it is also investigating Tesla over customer complaints about “phantom braking,” caused by the vehicle’s autopilot reacting to a perceived danger and automatically slamming on the brakes. The software glitch, which endangers lives, could be present in an estimated 416,000 Tesla cars.
But the SEC’s legal, and other, complaints against the industry leader tend to relate more to incidents in which Musk uses Twitter to announce or foreshadow major corporate decisions.
Last week, Tesla revealed that the SEC had subpoenaed the company for information after Musk launched a Twitter poll in November asking followers whether he should sell 10% of his Tesla stock. Tesla’s share price plunged 15% in the two days after Musk tweeted the poll.
Ordinarily, a company’s CEO would alert shareholders of major selloffs with an SEC filing. The Twitter poll, while sensational, appeared to be incidental to Musk’s share plans. Musk already had announced his intention to sell a large portion of his shares in a September 2021 SEC filing. Still, the SEC is investigating whether Musk, who said he would abide by the results of the Twitter poll, consulted his lawyer before posting the tweet, as per Tesla’s 2018 settlement with the SEC.
In 2018, the markets regulator sued Musk for his infamous “funding secured” tweet, in which Musk said he was considering taking Tesla private.
To settle the matter, Tesla’s board agreed a lawyer would vet any tweets that pertain to company interests before Musk posts them. The agreement also forced Musk to step down as chairman of the company for three years. The SEC fined Musk and Tesla $20 million each for damages done to shareholders.
However, in Tesla’s Thursday letter against the SEC, the carmaker says the regulator has failed to distribute that $40 million of fines to shareholders. The SEC, which normally distributes fines within two years of receiving them, hasn’t responded to Tesla’s letter.
Meanwhile, Musk’s tweets continue to invite controversy. On Thursday, the same day Tesla accused the SEC of harassing its CEO, Musk quietly deleted a meme he shared that compared Canadian Prime Minister Justin Trudeau to Adolf Hitler. Just one example of the ways in which Musk is an “outspoken critic” of government.
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