The SEC Asked Tesla whether the company pre-approved Musk’s tweets.
In October 2018, Tesla CEO Elon Musk settled with the U.S. Securities and Exchange Commission over a complaint stating his intent to take the company private was false and misleading. Part of that agreement required that Musk seek approval for his tweets from a “disclosure controls committee.” The terms of the settlement tasked the committee with making sure Musk complied with the terms of that settlement. On Monday, however, the SEC told a judge that Musk never sought approval for a single tweet.
Specifically, Musk posted on February 19 that Tesla would build 500,000 cars in 2019. That tweet violated the terms of the agreement, according to the SEC’s filing.
Musk later clarified his tweet to state that Tesla would reach an annualized production rate of 500,000 cars by the end of 2019. For the SEC, though, that tweet’s claims were “a blatant violation” of the agreement. Reuters reports that Musk responded to the regulator last month by saying his “single, immaterial” tweet was in compliance with the settlement. What’s more, he said the 500,000 unit production figure stemmed from Tesla’s earnings transcript. He then proceeded to say that “Something is broken with SEC oversight” shortly after the commission’s allegations.
Tesla did not screen Musk’s tweets
Now, the latest contention between Musk and the SEC stems from the agency asking Tesla whether the company screened his tweets in late February. After more that two weeks, Tesla gave a simple response: “No.” The SEC’s Monday filing then proceeded, saying “Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the court-ordered pre-approval policy went into effect.”
Musk’s lawyers contend the policy complied with the company’s communications policy. Tesla published a revised policy in December that calls for the company’s general counsel and in-house securities attorney to pre-approve any “material” written statement about the company. As recourse for these latest allegations, legal experts say the SEC could push to remove Musk from Tesla’s board.
Tesla is currently gearing up to produce the newly revealed Model Y, and is raising its prices on higher-end cars to help make the company profitable in the coming quarters.