SEC Asks Judge To Hold Elon Musk In Contempt
NEW YORK (CNN Business) — The Securities and Exchange Commission has asked a federal judge to hold Tesla CEO Elon Musk in contempt for violating a settlement deal reached last year.
Musk tweeted on February 19 that "Tesla made 0 cars in 2011, but will make around 500k in 2019." Regulators say that Musk did not ask for or receive pre-approval before publishing the tweet, per the terms of the settlement agreement.
Hours later, Musk sent a follow-up tweet indicating that the company will actually deliver just 400,000 cars this year.
The SEC's court filing Monday sent Tesla's stock down more than 4% in after hours trading.
Tesla (TSLA) and Musk reached separate $20 million deals with the SEC last fall to settle securities fraud charges against the CEO.
Musk to step down as Tesla's chairman as a result. The agreement with Musk also mandated that he get company approval of any social media posts with information that's "material" to shareholders. Tesla said it would establish a board committee to oversee Musk's future posts.
The SEC said Monday that Musk had not "made a diligent or good faith effort" to comply with the settlement.
It pointed to an interview Musk gave to CBS' "60 Minutes" in December. Musk said no one at the company was proofreading all his posts.
"The only tweets that would have to be ... reviewed would be if a tweet had a probability of causing a movement in the stock," he said. "Otherwise, it's — hello, First Amendment."
Musk also said in the interview that he didn't "respect" the SEC.
The billionaire initially got in trouble with regulators over a series of tweets last August about a potential transaction to take Tesla private.
Musk said he had secured funding to take Tesla private at $420 a share, causing the company's stock to soar. But he had not secured the funding, according to the SEC.
Tesla and Musk's lawyers did not immediately respond to requests for comment Monday.
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