SEC Says Tesla Chief Elon Musk's Tweets Violated Court Settlement

Feb 26, 2019
Originally published on February 26, 2019 1:05 pm

Updated at 1:05 p.m. ET on Tuesday

The Securities and Exchange Commission asked a federal judge to hold Tesla Inc. CEO Elon Musk in contempt for violating a court settlement that restricted what he could publish about his company's performance.

In a court filing Monday, the SEC argued that Musk had violated a settlement reached last year which required him to get approval from company officials before making any public statements that might impact Tesla's stock price.

On Feb. 19, Musk tweeted that "Tesla made 0 cars in 2011, but will make around 500k in 2019."

But that claim ran contrary to previous guidance from Tesla about the upstart car company's productivity projections.

In another tweet about four hours later, Musk said, "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."

In its court filing, the SEC argued that Musk had failed to have the first tweet checked and approved before sending it. U.S. District Judge Alison Nathan on Tuesday gave Musk until March 11 to show why he should not be held in contempt of court, The Associated Press reports.

"He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access," said the SEC.

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." But later he retracted the statement.

The SEC filed suit alleging Musk had mislead investors. In the settlement, Musk kept control of Tesla, but he was stripped of the title of board chairman and ordered to pay a $20 million fine.

He also agreed to get approval before tweeting messages about the company. In its filing, the SEC said the requirement "is clear and unambiguous."

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

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