The Securities and Exchange Commission has asked a federal judge to hold Tesla CEO Elon Musk in contempt for sending out an inaccurate tweet, according to a court document filed today in the Southern District of New York.
According to SEC officials, Musk violated the rules of a settlement reached last fall regarding his use of Twitter to disclose financial information about the electric carmaker. As part of the settlement, Musk stepped down as chairman of the company, but remained its CEO. He also agreed to seek legal approval before tweeting anything that might materially impact Tesla, a stipulation of the deal Musk himself told 60 Minutes last December had not been implemented.
Musk originally ran afoul of financial disclosure rules by tweeting that he secured funding to take Tesla private last August. The tweet in question today was posted on February 19th, in which Musk said Tesla would produce 500,000 cars this year. Tesla had officially guided investors that it would make 400,000 cars at most in 2019 just a few weeks earlier.
Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.
— Elon Musk (@elonmusk) February 20, 2019
According to the SEC, Musk allegedly did not seek approval for this tweet from Tesla’s legal counsel, as per the settlement guidelines. Three days after it was sent, the SEC confirmed with Telsa’s lawyers that no one had reviewed it.
Tesla’s lawyer worked with Musk to correct the original tweet in a follow-up, the SEC document says. But Musk’s initial projection still may be considered a violation because the information could be considered material to Tesla shareholders — and the lawyers didn’t see it before Musk sent it. Tesla’s general counsel left the company after just two months last week, just following the incident.
The SEC may have been looking for a slip-up from Musk, who has spent the last few months engaging in somewhat puzzling online antics. Since the settlement, the outspoken chief executive has used press interviews and his Twitter account to disparage the SEC publicly, telling 60 Minutes in the same interview in which he admitted to not letting anyone pre-approve his tweets that he doesn’t respect the agency and hand-picked his replacement for chairperson of Tesla’s board. In October, shortly after the settlement announcement, Musk referred to the agency on Twitter as the “Shortseller Enrichment Commission.”
As news of the SEC court filing began propagating on Twitter, Musk tweeted out a lighthearted meme, seemingly exercising yet again his right to use Twitter without seeking pre-approval for his tweets.
Earlier this month, Twitter CEO Jack Dorsey said Musk was his “favorite” Twitter user for “sharing his thinking openly.”