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Elon Musk sits stoically Thursday in a Manhattan court, hands crossed in front of him, while a federal judge was wondering if he should sentence him for contempt of court. The immediate cause was a tweet that Musk sent in February that, according to the Securities and Exchange Commission, violated the terms of their settlement. And when the judge finally bumped into the decision, ordering his lawyers and the SEC to settle their differences and return in two weeks with a resolution, he seemed relieved.
"Breathe," said Justice Alison Nathan of the US District Court. "Come back with your reason pants."
On leaving the courtroom, I asked Musk what he thought of the judge's call to action. Nathan is "an exceptional judge," said Musk softly. Again, before getting into a crowded elevator, he said, "I am very impressed by Judge Nathan's analysis."
The hearing is the result of a filing on Feb. 25, when the SEC asked a federal judge to sentence the CEO of Tesla in contempt. The agency claimed that Musk had violated the language in a tweet dated February 19, 2002, during a previous agreement between the SEC and Musk. In the tweet, Musk said Tesla would manufacture "about 500,000 cars" in 2018, which, according to the SEC, went against the company's official directive filed Jan. 30. Musk even released a correction a few hours later, which the SEC later determined because Tesla's attorney responsible for monitoring Musk's tweets felt that it needed to be changed.
The SEC argued that Musk was supposed to have his public communications on Tesla – tweets included – pre-approved by an internal lawyer designated under the settlement agreement signed last September. Musk disputes the fact that prior approval was part of this settlement, which was reached after the agency sued Musk for securities fraud following tweets that he had sent in August about the privatization of Tesla. Musk said at the time that he had "obtained funding" to make the move, but the SEC determined that it was false. Musk was forced to leave his position as president of Tesla and was fined $ 20 million.
Since the contempt claim in February, Musk and the SEC have been fighting exclusively in court documents. Musk's lawyers described the SEC's agreement as "unconstitutional takeover," saying the attempt to condemn him with contempt was "practically unacceptable at all levels." September regulations.
It is the first time that both parties appear in court to present their arguments to a judge. The result was two hours of semantic debate during which Judge Nathan, the SEC, and Musk's legal team quarreled over the language used in the settlement. The SEC accused Mr Musk of "recklessly tweeting unfounded information", ignoring the wording of the regulation, and then relying on "shifting justifications" to explain his actions. . Musk's team countered that the settlement was ambiguously written and that its tweets were immaterial and did not require any prior approval.
"This is an unusual case," said Justice Nathan at the hearing, which SEC counsel Cheryl Crumpton is an unusual case. "
Towards the end, however, Judge Nathan was not prepared to rule on the charge of contempt of court. "I'm going to admit surprise," she said. "For me, it screams it works."
And that's what the SEC and Musk have to do now, with Judge Nathan giving the two parties two weeks to come to a conclusion. If there is no solution, the judge says, "You will hear about me."
And there could be more problems in store for Musk. At the hearing, Mr. Crumpton stated that the SEC found Tesla's role "very troubling" in tracking social media activities on social media, and that the agency was still "evaluating" the possibility of taking action also against the automaker.
Leaving the courthouse, a reporter asked Musk if he would continue to tweet – a no doubt frivolous activity that has made him so appalled, in addition to tens of millions of dollars of fine . Why continue to do it? Why not just stop?
He looked over his shoulder, smiled and winked.
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