Tesla's Elon Musk in violation of SEC settlement, agency alleges
The Securities and Exchange Commission alleged in a federal filing on Monday that Tesla-founder Elon Musk violated a settlement with the agency when he tweeted in February about the electric carmaker's 2019 production targets. The news sent the company's stock into decline in after-hours trading on Wall Street.
In a separate post onTuesday morning, Musk said "Something is broken with SEC oversight."
The tweet under scrutiny by the agency stated Tesla would produce 500,000 cars in 2019, a figure Musk later clarified to mean the annualized production rate and said the company would actually ship 400,000 vehicles in the year. The SEC confirmed that the initial tweet was not pre-approved by Tesla, according to the filing.
The agency is asking a federal judge to hold the 47-year old entrepreneur in breach of the agreement reached last year after Musk posted on the social media platform that he would take Tesla private at $420 per share, a claim the SEC said was not supported by facts.
As part of the settlement, both Musk and Telsa were fined $20 million each -- for a total of $40 million. The company is also required to review Musk's tweets containing information pertinent to investors prior to posting on his personal account.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 353.97 | +14.33 | +4.22% |
The provision "requiring Musk to obtain pre-approval before publishing written statements containing material information about Tesla is clear and unambigous," the agency wrote in its latest filing.
In defense of the tweet, Musk argued he was restating information shared during the firm's fourth quarter earnings call, a claim the SEC said is without merit.
Speaking to investors, Musk said Tesla was "targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020." In rebuttal, the SEC said there "was no pre-approved written communication anywhere in the January 30 communications that stated that Tesla would make around 500,000 cars in the 2019 year."
A Tesla spokeswoman did not immediately respond to FOX Business' request for comment.
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The SEC's request marks yet another escalation in the battle between Musk and the agency.
After the initial settlement, Musk told "60 Minutes" that he does "not respect the SEC" and that no one at Tesla was reading his tweets before posting, remarks the agency says shows "that he did not intend to diligently attempt to comply" with the agreement.
He also name called the SEC last October the "Shortseller Enrichment Commission" as detailed in a tweet. Shortsellers, those betting that Tesla shares will fall, have dogged the electric car maker since its inception.