The Tesla CEO has run afoul of the US securities watchdog yet again after tweeting out company details.
The immediacy of social media poses a risk to us all. It makes it too easy to broadcast half-baked opinions, mistaken information or any other number of possible gaffes. Yet while the aftermath of an ill-conceived tweet may be relatively mild for the average person, they can be pretty severe if you’re Elon Musk.
The US Securities and Exchange Commission (SEC) has reportedly requested that a federal judge hold the billionaire Tesla CEO in contempt of court for a series of tweets he sent out last week.
The SEC filed the request after Musk took to Twitter on 19 February to tell followers that his company expects to manufacture “around” 500,000 cars in 2019. A few hours after, Musk corrected himself, saying: “Meant to say annualized production rate at the end of 2019 probably around 500k, i.e. 10k cars/week. Deliveries for the year estimated to be around 400k.” Musk’s representation argues that he was merely reiterating claims made in Tesla’s Q4 earning reports published in January 2019.
Along with its request, the SEC filed a series of emails traded with Musk’s legal counsel representatives, who admitted that the 19 February tweet had not been subject to the pre-approval process the CEO agreed to in his previous settlement with the SEC.
On 7 August, Musk caused a massive stir with the revelation that he intended to take his publicly traded car company private at $420 a share. Musk also claimed that he had already secured funding.
The initial surge in Tesla’s share value alarmed the SEC, which conducted an investigation and charged Musk with fraud, claiming the tweets about funding agreements to be “false and misleading”.
Musk and his company were ordered to shell out tens of millions of dollars to shareholders who were negatively impacted by the market volatility his antics caused. He was forced to step down as chair of Tesla for three years, a role that is now filled by former Australian telecommunications director Robyn Denholm. Musk was also required, as per the SEC settlement, to set up a pre-screening process for all senior executives’ communications with shareholders, tweets included.
Musk himself admitted in a December 2018 interview on 60 Minutes that this stipulation had not been satisfied, claiming to CBS’s Lesley Stahl that none of his tweets had been censored. Musk also claimed that he’d personally picked his successor and could “get anything done” that he wanted, effectively implying he maintained backseat control of his company.
Held in contempt
Musk has had a consistently antagonistic relationship with the SEC, which he once dubbed the “Shortseller Enrichment Commission” after reaching the aforementioned settlement. Just today (26 February), the CEO posted yet more (presumably unapproved) tweets regarding the current conflict.
SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing … 🤗
— Elon Musk (@elonmusk) February 26, 2019
The question remains of what could happen if the SEC is successful in its filing and Musk is indeed held in contempt of court.
The penalty would be at the federal judge’s discretion, who could do anything from further fining Musk to limiting his professional autonomy.