Tesla shares closed down 3.6% after-hours following headlines from Bloomberg reporting that the SEC is asking a judge to hold CEO Elon Musk in contempt for violating the previously agreed deal requiring him to seek pre-approval from Tesla Inc. for social media posts and other written communication that would be material to the company or investors. (as set forth in a court order following the SEC’s fraud lawsuit settlement from last year).
The SEC reportedly cited Musk’s “inaccurate” tweet in February 2019 about production.
According to the SEC’s complaint, on February 20, the SEC asked Musk and Tesla to confirm that his “guidance” Tweet had met the pre-approval conditions he agreed to in his settlement with the SEC. On February 22, about 48 hours after it broke that the company’s general counsel was leaving, Tesla confirmed that Musk’s Tweet had not been pre-approved.
Musk’s counsel didn’t get a look at his Tweet until more than four hours after Musk had published it.
As we noted at the time, this production target immediately caused a stir on Twitter, with many of the company’s critics pointing out that Tesla’s run rate for the rest of the year would have to be breakneck and record-setting in order to substantiate such production.
Musk took to Twitter to defend himself and call the SEC “embarrassing” – despite admitting that he didn’t have the Tweet pre-approved and noting that he switched from giving guidance with a 150k vehicle margin of error (350k to 500k), to a closely definitive “around 500k”.
The reaction was swift…
Finally, the SEC appears to be treating the billionaires the same as average joes.
The SEC’s full complaint can be read here.