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Could Elon Musk tweets put it on a thin ice with the SEC – again?
Tesla's CEO (TSLA) is still active on Twitter, despite a recent SEC sanction, stemming from the dubious use of his Twitter account, which has 23 million subscribers. In September, the SEC sued Musk for allegedly lied to investors saying it had "secured funding" for a privatization deal that never materialized.
Musk reached an agreement with the agency asking him to pay a $ 20 million fine and to step down as president of Tesla for three years. But he also asked the Tesla Institute to control Musk's Twitter communications, described by Steven Peikin of the SEC Enforcement Division as "an obligation to monitor Musk's communications with investors" in a statement.
But it is unclear exactly how this requirement is applied to Tesla. Since the settlement was concluded several weeks ago, Musk has continued to post tweets that have raised eyebrows, including one of them that included a thinly veiled search at the 39, agency, the "Shortseller Enrichment Commission". This week, the activity continued, including a tweet that said the sanction imposed by the SEC was "worth it", as well as another referring to the removal of its titles from the Tesla website.
Deleted my Tesla titles last week to see what would happen. I am now the nothing of Tesla. Looks good until now.
– Elon Musk (@elonmusk) October 29, 2018
A CEO mocking the authorities on Twitter – or posting weird tweets about it – is not necessarily criminal, but Musk is likely to have no favors, according to David Lavan, a former special SEC lawyer. partner at Dinsmore & Shohl LLP.
"It certainly does not buy him goodwill," Lavan said.
In an interview with Recode Media this week, Musk was asked if the settlement with the SEC meant that he would change his behavior on Twitter. Musk replied, "Not really, I think it's especially fair if it's something that could cause a substantial movement of the stock during trading hours." That's about it all. "
According to Lavan, according to the settlement, Tesla would be well advised to install someone from its legal department to examine Musk's tweets, although the nature of the support poses some problems. "If the process takes more than an hour, it probably will not work, because of what Twitter is: you can not write a tweet, and then send it back into the chain," said Lavan.
This is one of the reasons why relying on social media to publish business disclosures is considered a horrible idea by many experts. This could also pose problems for the application of SEC rules, noted Katalin Haynes, a professor of management at the University of Delaware.
"Too often, when the rules are in place, the SEC expects everyone to respect them, but if they do not, the consequences are negligible," Haynes said.
When it comes to monitoring the accuracy of Musk's Twitter account, another variable may be to determine exactly what "exact" means in the context of his account, which blends the business of his personal fame has an unpredictable effect.
Although Musk's "secured financing" tweet has led to the pursuit of the SEC, the CEO also has a long history of unrestricted tweet about anything that can produce significant swings in the course of action – for the best or the worst. In the last year or so, Musk's Twitter account has mixed everything up, from repeated insults to a British cave diver to shoddy references to Tesla product plans, such as the one claiming to have "top secret master plan" this raised the stock by 4.5%.
"If it's promotional, and it's true, then I think it's okay.A harder call is when you come up with something that's more ambitious than real," he added. Lavan.
When asked who monitors Musk's tweets on Tesla, a spokesperson replied, "We have nothing to share about it yet."
Tesla shares were roughly unchanged on Friday and rose about 10.5% this year.
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