The U.S. Securities and Exchange Commission petitioned a Manhattan court to hold Tesla CEO Elon Musk in contempt over tweets alleging violations of a 2019 fraud settlement. The regulator claims Musk breached an agreement requiring pre-approval of material social media statements, citing his February 19 post about 2019 production targets.
FILE PHOTO: SpaceX founder Elon Musk looks on at a post-launch news conference after the SpaceX Falcon 9 rocket, carrying the Crew Dragon spacecraft, lifted off on an uncrewed test flight to the International Space Station from the Kennedy Space Center in Cape Canaveral, Florida, U.S., March 2, 2019. REUTERS/Mike Blake
Musk initially tweeted that Tesla would produce 500,000 vehicles in 2019, later clarifying it referred to an annualized rate with 400,000 deliveries. A Tesla lawyer argued the CEO believed the statement had been pre-approved through the company’s January earnings release.
The September 2019 settlement resolved an SEC lawsuit over Musk’s "funding secured" tweet about taking Tesla private at $420 per share. As part of the agreement, Musk stepped down as chairman and both parties paid $20 million in fines.
Musk labeled the SEC the "Shortseller Enrichment Commission" after the deal and criticized its oversight days before a March 11 court deadline for his response. Legal analysts suggest the agency could seek higher penalties or restrict Musk’s role at Tesla.
A December 2019 communications policy mandates pre-approval of material statements by Tesla’s general counsel and securities attorney. A board committee now oversees compliance with the rule.
Reporting By Alexandria Sage; Editing by Meredith Mazzilli
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