Judge orders SEC and Tesla Musk to meet at least one hour for new settlement

NEW YORK (Reuters) – A federal judge in Manhattan on Friday ordered Elsa Musk, chief executive of Tesla Inc., and the US Securities and Exchange Commission to meet for at least an hour to try to resolve the concerns. of the agency regarding the use of Twitter by the billionaire.

The SEC had asked US District Judge Alison Nathan to hold Musk outrage over a tweet of Feb. 19 in which the agency claimed to have wrongly published important information about Tesla's vehicle production prospects without asking for downstream of his lawyers.

In an order made Friday, the judge gave the parties until April 18 to reach a resolution. If they do not, the judge said that she would decide whether to hold Musk in contempt. If he is found guilty of contempt, the judge will allow the parties to weigh possible sanctions.

The case has big stakes for Tesla.

When the SEC filed a lawsuit against Musk in September, she asked for her removal. The two sides reached an agreement in October, with Musk agreeing to step down as president of Tesla. The agreement also provided for the prior approval of Musk's written submissions that could be important to the company.

At a court hearing on Thursday, the SEC suggested that a greater oversight of Musk's communications, including the threat of further fines if he regressed, would be an appropriate remedy.

"It was a warning. I do not think he gets a second warning, "said Marc Leaf, a former SEC lawyer in New York.

In a statement on Thursday, Musk maintained his actions.

"I have a lot of respect for Judge Nathan and I'm delighted with her decision today. The tweet in question was true, irrelevant to the shareholders and in no way constituted a breach of my contract, "he said in a statement released by Tesla.

The October settlement resolved a lawsuit on a tweet on August 7 in which Musk said he had "secured funding" to make Tesla private at $ 420 per share.

The tweet of February 19th said: "Tesla made 0 cars in 2011, but will manufacture about 500,000 in 2019", which means 500,000 vehicles. Four hours later, Musk corrected himself, saying that annualized production would be "probably about" 500,000 by the end of the year, with total shipments for the year about 400,000.

The SEC said the first tweets on Feb. 19 contradicted Tesla's outlook on January 30, as it aimed for an annualized production of Model 3 exceeding 500,000 vehicles by the fourth quarter and expected delivery of 360,000 to 400,000 vehicles this year.

At the time, the SEC had also stated that Musk had violated their agreement by sending a tweet that had not been verified by Tesla's lawyers and that it should be held in contempt. He did not specify the sentences he wanted to impose, asking whether he would ask for his dismissal again or propose lesser measures.

Musk's lawyers countered that the first tweet of February 19 did not contain anything new and that the SEC had acknowledged during the settlement negotiations that it did not need the prior approval of all of them. the tweets about Tesla.