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NEW YORK: The clash between US regulators and Tesla group leader, Elon Musk, has taken a dramatic turn for a tweet that could cost the automaker its job as the automaker's CEO.
Musk, 47, is a visionary and inventive leader, but he is also very unpredictable, especially on the social network Twitter, where he often communicates in defiance of the rules imposed on leaders of publicly traded companies.
The Securities and Exchange Commission (SEC) on Monday (February 25th) accused it of failing to comply with the terms of an agreement reached between the court and itself and the regulator stating that it should avoid to send a tweet that may affect the price of Tesla shares.
READ: Tesla's Musla Calls SEC "Broken" in New Spit on Twitter
On February 19, he tweeted that Tesla would manufacture 500,000 cars in 2019, compared to 400,000 so far estimated by the company, as it struggled with production problems with Model 3.
Musk corrected himself four hours later, claiming that Tesla would actually produce about 400,000 cars this year: "Wanted to say an annualized production rate by the end of 2019 probably around 500,000".
But this correction was not enough for a federal judge, who gave Musk two weeks to explain why he should be spared any contempt for violating the agreement with the SEC.
OPTIONS
"No CEO would survive that," said Charles Elson, a specialist in corporate governance at the University of Delaware.
"If the board wants to overcome the problem, it may have to take steps as serious as relieve Musk of his executive responsibilities, at least for a while," said Stephen Davis, a member of the program's governance program. Harvard business. .
For Davis, executives of publicly traded companies are responsible for providing accurate information.
"You have the particular responsibility of being accurate … if the information is inaccurate, the question arises as to whether you are the right person to run an open society?"
Last year, the SEC opened an investigation on Tesla and Musk after tweeting that it was considering privatizing Tesla and that it already had the funds to do so – an assertion that is sure to make a difference. is proven false, but has nevertheless lost millions to investors who bet against the company.
Credibility at stake
To resolve the fraud charges stemming from the tweet, Musk had to resign as president of Tesla. He and the company were fined $ 20 million and the SEC asked for monitoring of its use of social media.
"We are skeptical that (Tesla) can prove his vigilance, especially since his new general counsel resigned last week, just hours after the social media posts in question," he said. Garett Nelson of CFRA Research.
"We believe that Musk will likely be subject to additional penalties that may include a large number of measures – additional fines, social media restrictions or worse."
While the Feb. 19 tweet "was supposed to highlight what (Tesla) has achieved in a short time, it also opens the door to potential legal risk for Musk," said Canaccord Genuity analyst Jed Dorsheimer.
The sanction against Musk could be heavy, as the credibility of the SEC as guarantor of investors' interests is at stake, Davis said.
"It 's not just Elk Musk, I think that in the end, the SEC also sends out to all business executives the message that the information that's going to be there." they are spreading on the market must be accurate, "he added.
Musk's reasoning is that "if I leave the company to collapse and everyone loses, so I can do what I want," argument that the SEC should ignore, said Elson.
"Unless they react appropriately to this situation, they have a real problem enforcing these laws to other people."
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