Elon Musk’s tweets have gotten him in trouble with the Securities and Exchange Commission again.
The SEC is alleging that Tesla’s CEO misled investors with a tweet last week about the company’s expected vehicle production targets. What’s more, the agency is charging that because Musk didn’t get preapproval of the tweet by Tesla, he’s in violation of the terms of a settlement he and the SEC reached last fall, and asked a judge to hold him in contempt of the federal court that approved that settlement.
“Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people,” the SEC said in a filing with the US District Court for the Southern District of New York. “Musk has thus violated the court’s final judgment by engaging in the very conduct that the pre- approval provision of the final judgment was designed to prevent.”
On Tuesday afternoon, Musk said on Twitter that Tesla would produce 500,000 cars this year — a number that was far above its previous forecasts. Four hours later, he revised himself, saying that the company actually still estimates it will produce only 400,000 cars this year, but that it expects to be producing them at a 500,000-car rate by the end of the year.
The slip-up seemed problematic, and not just because investors may have traded on the erroneous number Musk gave first. Musk had agreed last fall to have his communications with shareholders — including his tweets — pre-approved by a company lawyer.
In correspondence with the SEC, Bradley Bondi, who represents Tesla as a lawyer for Cahill Gordon & Reindell, acknowledged that Musk hadn’t gotten pre-approval of his first production-related tweet last week, but argued that wasn’t a problem.
“Although the [first] tweet was not individually pre-approved, Mr. Musk believed that the substance had already been appropriately vetted, pre-approved, and publicly disseminated,” Bondi said. “Moreover, the tweet was made outside of NASDAQ trading hours.”
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