The continuing saga of Elon Musk vs. The Securities and Exchange Commission (SEC) has a new development. The SEC has asked a judge to hold the Tesla and SpaceX CEO in contempt due to alleged violations of his settlement deal.
This is not the first or second time Elon Musk has found himself in hot water with the SEC in recent months. He continues to serve as an example of what not to do while under the scrutiny of a powerful federal regulatory agency.
The latest incident stems from the terms of the settlement agreement that Elon Musk reached with the SEC, which requires that all his tweets are reviewed and approved by his company before being sent. This was crucial to the settlement, as Musk’s initial brush with the SEC was over a Musk tweet that stated he had secured the funding to take Tesla private.
The SEC points to a February 19 tweet by Musk as evidence that he has broken the terms of the deal. He tweeted “Tesla made 0 cars in 2011, but will make around 500k in 2019”. Later in the day he followed up with “Meant to say that annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.
The SEC says they reached out to the company to determine whether the tweets had been reviewed prior to publishing. They told the SEC they had not reviewed and approved the first tweet. “Instead, Tesla’s attorneys saw the tweet after it was published and then contacted Musk to draft a corrective second tweet, the SEC said in a motion filed in the U.S. Southern District Court.” (Source: “SEC asks judge to hold Tesla’s Elon Musk in contempt, saying he violated settlement deal”, The Washington Post)
The SEC is not asking for a specific punishment for Musk, but legal experts suspect the consequences could be severe.
We’ve said it before and we’ll say it again: there’s no harm in having a healthy respect for the SEC. Our experienced attorneys can help you protect your interests and limit the damage if you find yourself on the wrong side of an SEC investigation or action.