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Elon Musk's lawyers have now responded to the court about the SEC's attempt to condemn them in defiance of Tesla's chief executive. She explains in detail how the federal agency is attacking the automaker and its rulers with absurd nonsense about meaningless tweets.
In October, a judge approved the settlement of the SEC's complaint against Musk over his "secured financing" comment about his attempt to privatize Tesla.
One of the terms of the deal is that Tesla's board should be more closely monitoring Musk's tweet, which should be restricted when it comes to statements likely to move Tesla's shares.
Last month, the SEC asked a judge to sentence Musk in contempt for breaking the rule of settlement with a tweet that he had posted a week ago:
They argued that it was new information that should have been pre-approved by Tesla before he could tweet about it.
A judge gave Musk two weeks to explain why he should not be found guilty of insulting his agreement with the SEC.
In a rather absurd situation, the chief executive's lawyers produced a 33-page document defending the benevolent tweet.
Musk's lawyers argue that the information was not important:
"The 7:15 tweet was an abbreviated gloss on topics that had already been thoroughly analyzed in corporate filings and a results conference with analysts. Any reasonable investor would have read the tweet referring to much more detailed information and in-depth discussions on the same topic. "
They detail where and when the information has already been disclosed before the tweet:
"Before Musk published the 7:15 tweet, the content and content of the tweet – that is, Tesla's projected production and production rates for 2019 – had been publicly disclosed in several documents and discussed in detail. in a result call. As noted above, on January 2, 2019, Tesla filed a Form 8-K reporting its production of "25 161 S and X models in the fourth quarter of 2018", which is consistent with our long-term turnover rate. about 100,000 per year. 1 to 5 hours. Then, at the call of January 30 results, Musk said the production of Model 3 in 2019 would be in the order of "350,000 to 500,000" vehicles. Ex. 3 in 8. Tesla also indicated in its January 30 Update and in Form 10-K of February 19 that it "was targeting an annualized outflow of Model 3 greater than 500,000 units between the fourth quarter of 2019 and the second quarter of 2020 ". 4 to 3. Thus, whether we add the production estimates of the three models (S, X and 3) or that we only take into account the model 3 projections, the assertion from Musk that Tesla would manufacture "about 500,000" "cars" in 2019 was in the previously disclosed ranges. The tweet was just not a "news". "
The document also explains how the SEC sent several requests with short deadlines to Tesla and Musk regarding the situation in order to demonstrate that the tweet was a violation of the settlement agreement.
Musk's lawyers argue that what the SEC does amounts to an "unconstitutional coup" and they suspect this is retaliation for what Musk said about the SEC in a recent interview.
In a 60-minute interview, Musk said that he had "no respect" for the SEC and he indicated that he thought the agency was working to help the shorts bet against Tesla.
The lawyers wrote to Musk's defense:
"During the interview, and in accordance with his rights to the first amendment, Musk strongly criticized the SEC. The SEC relied heavily on this interview in its contempt petition for retaliation and censorship. "
They claim that the SEC is urging the court to "trample on the rights of Musk's First Amendment" and ask to reject the attempt to hold him in contempt of court.
More back and forth between the two parties is expected before a decision is made.
Here is the full court filing:
Electrek's Take
We live in a crazy world. A billionaire, a car manufacturer, and a federal investor protection agency all compete in court for a rather benign tweet.
Does the SEC really think that it protects investors here?
Who benefits exactly? Only Tesla shorts and lawyers are happy with it – not because they think it's the right thing to do, but because it's an opportunity to make money.
This should be enough to understand that this is not correct.
There are now a dozen official letters and court documents about one meaningless tweet.
It's impressive.
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