Elon Musk's lawyers slam SEC file against Tesla's CEO

Robyn Beck | Pool | Reuters

Tesla's founder, Elon Musk, speaks at the unveiling ceremony organized by "The Boring Company" for the test tunnel of an underground transportation network project in Los Angeles County, in Hawthorne, California on December 18, 2018.

Tesla CEO Elon Musk retorted on Monday against US securities regulators, saying his recent tweet about the electric car manufacturer's production volume did not violate the court's ruling and he there was no reason to criticize him.

Musk's tweet to its more than 24 million followers on Twitter, claiming that the electric vehicle manufacturer would produce about 500,000 cars by 2019, was in line with the company's communications policy for the purpose of senior officials, wrote the Tesla chief's lawyers in a case filed in federal court in Manhattan.

Counsel argued that the US Securities and Exchange Commission's claim that Musk was found to be in civil contempt was inaccurate in light of the facts and the law.

The SEC had asked the court to condemn Musk in contempt, claiming that his February 19 tweet violated a fraud deal in September banning him from sharing important Tesla information on social media without the company's prior approval .

The settlement between Musk, Tesla and the SEC solved the dispute over Musk's claims on Twitter that he had "secure financing" to privatize Tesla at $ 420 per share.

The SEC called these tweets "false and misleading" and a privatization deal never materialized.

As part of the settlement, Musk resigned as president of the company. Tesla and he agreed to pay each a $ 20 million fine.

The resumption of the public battle between Tesla's CEO and the main US securities regulator adds additional pressure on Tesla's public face, Musk, who is struggling to make the company profitable after reducing the price of its shares. Model 3 sedan at $ 35,000.

Tesla gave up its plan to close all of its stores in the US and said it would raise prices for its high-end vehicles by about 3% on average.

Musk had called the regulator "the short sellers' enrichment commission" on Twitter after the settlement, and had tweeted that "something is broken by the SEC's watch" just a day after the agency started to apply for a contempt order.

Legal experts said the SEC could now pursue multiple tracks, including a heavier fine, imposing further restrictions on Musk's activities or dismissing Tesla's board of directors.

Tesla released a new communication policy in December for senior executives under the settlement. He has asked Tesla's General Counsel and a newly appointed securities lawyer to pre-approve any written Tesla statements that may be material.

A Disclosure Control Committee, comprised of Board members Brad Buss, Antonio Gracias and James Murdoch, was tasked with monitoring compliance with the new policy.