Elon Musk sparks controversy on Twitter in wake of SEC regulations

A guessing game ensued on Twitter to explain what the CEO meant by his tweet. Does he just share a song that he listened to early in the night? Or was it an insolent reference to his rebellious style following the anger of the Securities and Exchange Commission?

Some people responding to Mr. Musk's tweet had a theory that would be more problematic for the CEO: O.P.P. It was a veiled reference to "operating profit". Tesla, after all, had just finished the third quarter for which Mr. Musk had promised the company would make a profit after a series of losses stemming from the difficulties associated with the production of the Model 3 sedan.

"Of course, the operating profit could be positive," said James Stephenson, 40, a Tesla shareholder and financial analyst in Florida. "To be clear, OPP is not an abbreviation commonly used to describe the profit margin. But Naughty by Nature has never had a hit song called Ebitda. "

Tesla declined to comment. The SEC declined to comment on Monday.

The securities regulators on Thursday accused Musk of having deceptive shareholders and violating the securities law by tweeting that he had financed what would have been the biggest buyout of companies ever made. The agency and Mr. Musk settled on Saturday. The agreement stipulates that he must comply with Tesla's procedures to supervise any of his tweets about the company and approve any statement that may contain important information.

The terms of the settlement are not final until they have been approved by a federal judge. Mr. Musk would not technically violate the court order or securities law unless he made a statement that he knew, or should have known, was false and misleading.

Once the order is in place, if Mr. Musk was again found guilty of knowingly making a false statement after the SEC's settlement, he could not only be prosecuted for violating the laws on the securities, but also for breaching an injunction of a court forming part of the contract, according to people close to the situation and former SEC lawyers.

The injunction would "permanently bar" Mr. Musk from violating the anti-fraud provisions of securities laws that make it illegal to knowingly make false or misleading statements.

So begins a new era for Tesla and Mr. Musk, one of the most prolific CEOs of the business world on Twitter, whose direct approach will be a challenge that Tesla will have to meet on a platform designed to encourage spontaneous thoughts and unfiltered. . We do not know how Tesla will publish Mr Musk's tweets sent to more than 22 million subscribers.

On Monday, Tesla filed a SEC disclosure after the disclosure of a memo regarding an employee sent by Mr. Musk over the weekend, in which he was stressed that the electric car maker "was on the point to achieve profitability and prove that the opponents were wrong. " but, to be sure, we must really do well tomorrow [Sunday]. If we do our best tomorrow, we will win an epic victory that will exceed all expectations. "

Tesla's stock on Monday jumped 17.4 percent to $ 310.70, up from 14 percent on Friday after the SEC's complaint was announced. Tesla investors seem to be delighted to learn that Mr Musk can remain as CEO, although he must leave the presidency for three years. Tesla needs to appoint two new outside directors and strengthen the oversight of its public communications.

Although Musk saw Twitter as a way for him to communicate his message and push back the critics, it also led to self-inflicted errors.

He often responds to other Twitter users with a casual tone and likes to joke, as he had done on April 1 when he had tweeted an April Fool's Day joke. about the bankruptcy of Tesla. The next day, shares fell by more than 7% and he ended up saying that he was joking. "Obviously, I'm not going to make an April Fool's joke about going bankrupt [sic] if I thought that there was a chance that this would actually happen (sigh.) "

In July, he suggested that a pedophile was a British cave explorer involved in rescuing a boys' football team in Thailand. Mr. Musk removed the tweet and apologized. But he later doubled his claim, and the man has since sued Mr. Musk for defamation. Mr. Musk did not comment on the lawsuit.

But the biggest obstacle came on August 7 when he unveiled his privatization plan in a series of tweets. He tweeted that he was considering taking Tesla privately, had a "secured financing" and indicated a potential price of $ 420. After the tweet, Tesla shares jumped about 11% to $ 379.57 that day. In the days that followed, the Wall Street Journal and others later reported that Musk and his advisers were still trying to align investors and potential buyers.

The SEC, in its lawsuit to remove Mr. Musk from Tesla, alleged that he had never discussed a privatization transaction at $ 420 per share with a potential funding source, between other complaints. Mr Musk called the SEC trial "unjustified", while behind the scenes, his lawyers and himself vowed to fight him until the settlement was accepted this weekend. reported the Journal.

Mr. Musk's use of Twitter exceeds most technical executives and a review of his posts reveals a dramatic rise this year, as Tesla struggled to increase model 3 production – his bet that a sedan more affordable can help the builder to evolve from a luxury niche car. company in a mainstream car manufacturer.

By Tuesday, Tesla is expected to announce production and delivery figures for the third quarter, closely monitored indicators that indicate whether or not the company maintains its pace of construction and supply of models.

– Susan Pulliam, Allison Prang and Dave Michaels contributed to this article.

Write to Tim Higgins at [email protected]