Elon Musk’s Tesla tweets violated SEC settlement: report
US regulators alerted electric car-maker Tesla last year that its CEO Elon Musk’s use of Twitter had twice violated a court-ordered policy that required company lawyers to pre-approve some of his tweets.
In correspondence sent to Tesla in 2019 and 2020 and obtained by the Wall Street Journal, the Securities and Exchange Commission said that Musk’s tweets about Tesla’s solar roof production and its stock price had violated the required policy.
Tesla and the SEC settled a case in 2018 that alleged Musk had committed fraud by tweeting that he had “funding secured” to take the company private at $420 a share. The SEC fined him and Tesla $20 million each, forced him to step down as Tesla’s chairman, and Tesla agreed to have Musk’s public statements on social media overseen by lawyers.
The SEC has since monitored Musk’s use of Twitter, even alerting the company that they’ve violated the agreement and asking a Manhattan federal court to consider holding Musk in contempt, according to the documents obtained by the Journal via a Freedom of Information Act request.
Two of Musk’s tweets, in particular, caught the attention of SEC officials, according to the Journal. One was posted in July 2019, when Musk tweeted, “Spooling up production line rapidly. Hoping to manufacture ~1000 solar roofs/week by end of this year.”
Spooling up production line rapidly. Hoping to manufacture ~1000 solar roofs/week by end of this year.
— Elon Musk (@elonmusk) July 30, 2019
The SEC wrote in a letter to Tesla that the tweet needed to be vetted by lawyers because it addressed “production numbers or sales or delivery numbers,” the Journal reported. Tesla responded that the tweet had not been pre-approved, but that a committee later determined it didn’t need to be authorized because it was “wholly aspirational,” the report said.
The second violating tweet came less than a year later, when Tesla’s shares tumbled after Musk tweeted, “Tesla’s stock price is too high imo.”
That tweet infamously wiped about $13 billion off of Tesla’s market capitalization.
Tesla stock price is too high imo
— Elon Musk (@elonmusk) May 1, 2020
When the SEC wrote to Tesla with regards to that tweet, the company responded that the tweet didn’t need to be pre-approved because it was just “personal opinion,” according to the Journal.
“In the face of Mr. Musk’s repeated refusals to submit his covered written communications on Twitter to Tesla for pre-approval, we are very concerned by Tesla’s repeated determinations that there have been no policy violations because of purported carve-outs,” the SEC reportedly wrote in a letter to the company.
In a letter separately obtained by the Journal, Tesla’s lawyers accused the SEC of trying to “harass Tesla and silence Mr. Musk” with investigations that “overlapped endlessly.”
“The serial nature of these investigations leaves us gravely concerned that the SEC is targeting Mr. Musk for an improper purpose,” attorney Alex Spiro reportedly wrote.
Representatives for the SEC did not return The Post’s request for comment.
The episode underscores the combative nature of Musk and his companies when it comes to regulatory agencies.
After the 2018 settlement with the SEC, Musk struck a defiant stance toward the agency in a December 2018 “60 Minutes” interview, saying, “I do not respect the SEC.” He also tweeted a suggestive jab at the commission last year: “SEC, three letter acronym, middle word is Elon’s.”
Musk’s ongoing tweets about cryptocurrencies and various companies have continued to drive market movements, spurring rumors of another potential SEC investigation.