The SEC wants Elon Musk to be found guilty of contempt for his tweets

SAN FRANCISCO – The tweeting habits of Tesla CEO Elon Musk have sparked another legal challenge from worried stock market regulators that he is using his Twitter account to deceive investors.

The latest crisis occurred on Monday night when the Securities and Exchange Commission petitioned a New York federal court to sentence Musk for contempt for a $ 40 million settlement that he had reluctantly entered into with the company. control agency of the US stock market five months ago.

Allegations that Musk allegedly violated the agreement by tweeting without the company's approval could revive the debate over whether he became too reckless to continue to hold the position of CEO. from Tesla. This cloud hovers above Tesla, although many analysts still believe that Musk's vision is an indispensable part of the electric car manufacturer that he co-founded in 2003.

Tesla's stock fell about 4% on Monday after normal business hours, reflecting investor anxiety over the latest drama surrounding Musk.

Contempt charges are generally brought against persons who defy a court order. The SEC regulations were approved by a judge last fall, exposing Musk to fines or even jail time if he is found in contempt.

"He looks like a recidivist and a bad actor," said Carl Tobias, a law professor at the University of Richmond. "The SEC is taking action because it has the responsibility to protect the interests of consumers, investors and the public."

Tesla did not immediately respond to requests for comment on the latest SEC decision. But letters from the company's lawyers included in Monday's file argue that Musk remains in compliance with the settlement.

The SEC filed a lawsuit against Musk last September for using its Twitter account in August to announce that it had obtained the necessary financing for the eventual acquisition of Tesla, a news that caused a sharp drop in the company's shares. . He later dismissed this buyout idea, but the regulators concluded that he had never had money to conclude the deal that would have probably required at least $ 25 billion. .

Musk initially claimed that he had done nothing wrong before reluctantly accepting that future tweets likely to affect the Tesla stock be pre-approved.

The SEC alleges that Musk violated the terms of the deal with a February 19 tweet that Tesla would manufacture about 500,000 cars this year. About four and a half hours after this tweet, Musk corrected his statement, saying that he meant that Tesla had started making cars in a weekly sequence that would result in 500,000 cars for a whole year, but not necessarily for 2019.

Musk acknowledged that he had not obtained the company's approval for the initial tweet of Feb. 19, according to the SEC, although auto manufacturing statistics may affect manufacturers' stock prices automobiles. In his defense, Musk said that he did not think his tweet needed an authorization because it was based on information revealed in late January. The tweets of February 19 took place while the US stock market was closed. Tesla's share has only increased by 1.10 USD, or less than 1%, the next day.

But these factors clearly did not influence the SEC, which illustrated Musk's allegedly contemptuous conduct with some of the comments he made in a "60 Minutes" television interview broadcast on December 9th.

In this interview, Musk revealed that at Tesla, no one was watching the tweets that he publishes on his account, which now has 25 million followers. When Tesla officials were able to find out if his tweets would violate SEC regulations if they did not prepare them before they were published, Musk said, "Well, I guess we could make mistakes." Who knows? "

The SEC also pointed out that in the same interview, Musk said, "I want to be clear, I do not respect the SEC, I do not respect them."

Tesla's legal team realized that Musk may have crossed a line with his Feb. 19 tweet on auto manufacturing, according to the SEC. After the publication of this tweet, a lawyer from Tesla "immediately made arrangements to meet Musk and write the corrective statement that Musk tweeted four hours later."