Elon Musk Faces U.S. Contempt Claim for Violating SEC Accord
The settlement required him to seek pre-approval for social media posts and other communication that would be material to the company or investors.
The U.S. Securities and Exchange Commission asked a judge to hold Elon Musk in contempt for violating last year’s settlement with the agency, raising new a round of regulatory issues for the embattled Tesla Inc. CEO.
The SEC claimed on Monday that a Feb. 19 tweet by Musk violated the settlement when he wrote that “Tesla made 0 cars in 2011, but will make around 500k in 2019.”
The settlement with the agency required him to seek pre-approval from the company for social media posts and other written communication that would be material to the company or investors.
“He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access,” the SEC said in court papers filed in Manhattan federal court.
Tesla shares plunged as much as 5.4 percent as of 6:30 p.m. Monday in New York. The stock was already down 10 percent this year through the close of regular trading.
The SEC’s move puts Musk in legal peril once again.
“They have to view the conduct as akin to another violation of securities laws to take this step,” said Brad Bennett, a former head of enforcement at the Financial Industry Regulatory Authority who previously worked as an SEC enforcement attorney.
“It’s a very novel situation where someone is running an enterprise with this kind of market cap and gives the SEC cause for concern that the person is not capable of following the securities laws,” Bennett said.
Calls to Tesla and emails to Musk and his representative weren’t immediately returned.
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