Elon Musk Accused Of Violating SEC Settlement Agre…
The United States Securities and Exchange Commission believes Elon Musk has violated his 2018 settlement agreement twice.
According to correspondence first obtained and reported on by the Wall Street Journal, SEC officials pointed to a tweet on May 1, 2020, in which Musk said that Tesla’s stock price was “too high,” prompting a more than $13 billion decline in the company’s market value. The regulatory body also highlighted a July 2019 tweet about Musk’s goal to make 1,000 of Tesla’s solar roofs per week by the end of that year. On both occasions, it claims that Tesla’s lawyers did not review and approve his tweets.
The Tesla CEO is known for his casual use of Twitter — where his unusual communication style is unlike that of many other top executives.
The SEC sent the letters to Tesla in 2019 and 2020 shortly after each tweet but has not taken any apparent enforcement action against Musk or the company.
Musk is required to have Tesla-related tweets that contain material company information approved by an attorney before posting them. A so-called “Twitter sitter” was part of a revised settlement agreement struck between the SEC, Musk, and Tesla. The settlement terms also required Musk to give up his role as chairman of the Tesla board, among other things.
Musk originally found himself in hot water with the SEC in August 2018 after he infamously tweeted he had “funding secured” to take Tesla private at a price of $420 per share. (He did not, and had only held preliminary talks with Saudi Arabia to fund such a move). The agency charged him with securities fraud in September, and the two sides quickly settled. Musk agreed to step down as chairman of Tesla, and also agreed to have his public communications (aka his tweets) vetted by the company.
“Tesla has abdicated the duties required of it by the court’s order,” Steven Buchholz, one of the SEC’s enforcement officials, wrote to Tesla in May 2020 in the letters the WSJ obtained. It was in response to the stock price tweet. Tesla responded that the tweet was simply Musk’s opinion.
Musk went on 60 Minutes in late 2018 to say that no one has been approving his tweets despite the settlement. His public attitude toward the agency hasn’t changed much from the open scorn Musk expressed on 60 Minutes. Last July, he tweeted, “SEC, three-letter acronym, middle word is Elon’s.”