The US Securities Exchange Commission (SEC) told a federal judge on Monday that Elon Musk’s tweet concerning Tesla Inc.’s production targets violated the settlement agreement with the SEC and an unambiguous court order approving the terms of the settlement.
The SEC filed a motion in the US District Court for the Southern District of New York in February, requesting to hold the Tesla CEO in contempt after he tweeted, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” The information was later proven inaccurate, and Musk corrected it hours later.
The SEC’s complaint focused on Musk’s August tweet disseminated to his then more than 22 million followers that stated, “he could take Tesla private at $420 per share (a substantial premium to its trading price at the time), that funding for the transaction had been secured, and that the only remaining uncertainty was a shareholder vote.” The SEC argued that:
[I]n truth, Musk had not discussed specific deal terms with any potential financing partners and that he knew the potential transaction was uncertain and subject to numerous contingencies. Musk’s tweets caused Tesla’s stock price to jump by over six percent on August 7 and led to significant market disruption.
The SEC said Musk admitted that he did not seek pre-approval for the tweet. Instead, Musk “thought he was simply recapitulating information that had already been pre-approved in connection with two Tesla communications that took place 20 days earlier on January 30, 2019, specifically Tesla’s Fourth Quarter & Full Year 2018 Update and its earnings call.”
Musk’s counsel wrote the judge on Monday, requesting additional time to respond to the SEC’s new-founded allegations concerning violations of the settlement agreement.