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Elon Musk, SEC told by judge to try to settle their dispute

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The Tesla CEO has tweeted a few questionable items, and one is bringing about a lawsuit from the Securities and Exchange Commission.
USA TODAY

NEW YORK — A judge told Elon Musk and the U.S. Securities and Exchange Commission to try to settle their dispute over a contempt of court request for a controversial tweet by the tech billionaire within the next two weeks — or else. 

U.S. District Court Judge Alison Nathan issued the instruction after a hearing in which she said she was surprised that the SEC sought the contempt ruling as a first response to the tweet in question. 

“My call to action is for everybody to take a deep breath. Put your reasonableness pants on,” Nathan told the two sides. 

She made it clear that she would issue a decision if the two sides could not reach a settlement.

The SEC has argued that the tweet on the night of Feb. 19 violated the terms of a settlement Musk agreed to in September. At that time, Musk accepted the Wall Street regulators’ penalties for using Twitter to proclaim what the SEC concluded were “false and misleading statements” about the prospects of him taking the publicly traded car company private.

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The settlement required the Tesla CEO to give up his board chairmanship of the company for three years and pay a non-tax-deductible penalty of $20 million. He also agreed to comply with Tesla procedures requiring him “to seek pre-approval of any written communications, including social media posts, that contained or reasonably could contain information material to Tesla or its shareholders.”

In the tweet in question, Musk told Twitter followers “Tesla made 0 cars in 2011, but will make around 500k in 2019.”

“Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people,” SEC lawyers argued in their show-cause motion for a contempt of court ruling. “Musk has thus violated the court’s final judgment by engaging in the very conduct that the pre-approval provision of the final judgment was designed to prevent.”

As further evidence, SEC lawyers cited the follow-up message Musk sent more than four hours after the initial tweet.  

Musk clarified: “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.”

 

Read or Share this story: https://www.usatoday.com/story/money/2019/04/04/elon-musk-tesla-ceo-sec-set-for-legal-showdown-over-contempt-claim/3355861002/




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