The love and hate relationship between Tesla CEO Elon Musk and the SEC has reached a new level on Monday. The regulator has demanded that Musk be found guilty of contempt of court for violating a previous judgment related to his penchant for tweet info that goes against the rules on securities.
The US Securities and Exchange Commission (SEC) has filed a contempt order against Musk. He said he had violated a fraud settlement by tweeting important information without prior permission. The news provoked a spiral of Tesla's actions. It was down 5% during the extended trading on Monday.
We knew that would lead to that
NCC reported Musk's latest tweet that would probably make him dive into hot water with the SEC.
On February 19, he tweeted:
Tesla made 0 cars in 2011, but will make about 500,000 in 2019
– Elon Musk (@elonmusk) February 20, 2019
In its document, the SEC has focused on these tweets, stating:
Musk has not requested or received prior approval before publishing this tweet, which was inaccurate and distributed to more than 24 million people. Musk therefore violated the Court's final judgment by engaging in the conduct that the provision of the prior approval of the final judgment was intended to prevent.
Work the nerves of the SEC
Shortly after the SEC's SEC filing, Musk tweeted:
Oh hi lol pic.twitter.com/9WvbtTHoxS
– Elon Musk (@elonmusk) February 26, 2019
What tweet has to do with the move of the SEC is to guess. However, it is an interesting timing.
The SEC filed a lawsuit against Musk in September 2018. She claimed to have "published a series of false and misleading statements to millions of people, including members of the press, via the Twitter social media platform." .
The SEC concluded that Musk's "misleading tweets" had pushed Tesla's share price by more than 6% on August 7, 2018. That's when he tweeted that he could take Tesla in camera at $ 420 per share. These misleading tweets caused Tesla's share price to rise more than 6% on that date, according to the SEC.
Under the settlement, Musk was fined $ 20 million. This is probably a radical change for the billionaire. However, the regulation also removed his title of president, which probably piqued his ego a little.
The only aggravating requirement was that Musk seek the approval of a newly created supervisor to review everything he posts on social media, including Twitter.
No lost love
During an interview with the 60-minute television show, Musk said:
"I want to be clear. I do not respect the SEC. "
He said about the role of president that he would prefer "not to have any title at all".
About the tweeting, Musk said:
The only tweets that should be, for example, "revised" would be if a tweet had a probability of causing a movement in the stock [price]. Otherwise, it's "hello, first amendment". Like, freedom of expression is fundamental.
Here is the interview "60 Minutes".
It's time to be serious
Musk plays either with the SEC or simply unimportant. For example, on February 20, SEC staff asked Musk and Tesla to confirm whether Musk had complied with Tesla's pre-approval procedures required by the court's final judgment.
Tesla answered by saying:
Musk's tweets have been reviewed after their release, but there is no reason to believe that Musk requested or obtained prior approval of a tweet before publishing it.
Remember, just the day before, on February 19th, Musk had tweeted the blunder concerning the production figures, including those of his model 3. He then tried to correct the tweet, but without success for the observers who knew that this would raise the concerns of the angry SEC.
The filing of the SEC states:
For all the reasons stated, the SEC respectfully requests the Court to issue an order setting out the reasons why the Defendant Elon Musk should not be held in contempt of court for the final judgment rendered by the Court on October 16, 2018.
Just last week, CCN reported on Musk's joke when discussing the value of Bitcoin. It remains to be seen whether he will take a serious tone now that he faces charges of contempt of court.
Musk may be indifferent to the SEC, but the court system is not famous for playing games. The outcome of the contempt claim is now in the New York District Court.