Elon Musk Trial Resumes After Ruckus In Court
July 13, 2021
June 2, 2021
The U.S. Securities and Exchange Commission contended to Tesla last year that CEO Elon Musk had violated a court agreement requiring the company’s lawyers to sign off on some of his tweets in advance, the Wall Street Journal reported Tuesday, almost three years after Musk settled an SEC probe into whether his tweets about the company constituted securities fraud.
The SEC reportedly wrote letters to Tesla in 2019 and 2020, pointing to a pair of tweets it said the electric carmaker should’ve vetted beforehand under their settlement: A 2019 tweet in which Musk boasted about Tesla’s future production capacity, and an infamous — and possibly market-moving — 2020 tweet in which he said Tesla’s stock price is “too high imo.”
The regulatory agency’s staff accused Tesla of repeatedly failing to enforce its court-ordered policy requiring Musk to get approval before tweeting, with an SEC official reportedly writing, “Tesla has abdicated the duties required of it by the court’s order.”
Tesla argued both tweets were exempt from the pre-approval requirement because they were personal opinions or aspirational predictions about the company, according to the Journal, which obtained the SEC’s correspondence through a FOIA request.
Musk first drew the SEC’s attention in 2018, after he claimed over Twitter he’d secured funding to take Tesla private at $420 a share. The regulator sued him for securities fraud, arguing the tweet misled investors because the purported deal to take Tesla private was actually far from certain. Musk quickly settled with the SEC, and under the terms of the agreement, Tesla promised to “put in place additional controls and procedures to oversee Musk’s communications.” After a dispute over possible violations of the settlement, Musk and the SEC clarified in 2019 that Tesla needs to approve any tweets about the company’s finances or other information considered material to investors.
This isn’t the only time Musk — who’s famous for his enthusiastic social media presence — has landed himself in trouble by tweeting. Earlier this year, the National Labor Relations Board said Musk needs to delete a 2018 tweet questioning some Tesla employees’ efforts to unionize, arguing it violated federal labor laws by insinuating staff could lose their stock options if they vote to form a union.
June 25, 2021
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