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Tesla's Elon Musk steps up his Twitter attacks on SEC regulators

SEC goes after Elon Musk

Elon Musk is not backing down in his ongoing feud with the U.S. Securities and Exchange Commission, even as the Tesla chief faces another legal hurdle from regulators worried his controversial tweets might mislead investors.

"Something is broken with SEC oversight," Musk wrote Friday morning, replying to a tweet by a Twitter user who had expressed empathy for Musk in his dealings with the stock-market regulator. 

The SEC on Monday called on a federal judge to hold the Tesla CEO in contempt, saying Musk breached a settlement mandating he get the go-head from his company before taking to social media with posts that contain information deemed material to investors. The federal judge on Tuesday gave Musk until March 11 to show why he should not be held in contempt of court. 

The agency alleges Musk violated its deal by tweeting on Feb. 19 that Tesla would produce about half a million cars this year. That tweet was followed several hours later by another that had Musk clarifying the company's deliveries would come to about 400,000. 

Musk contends the SEC did not take into account a comment he made on the electric-car maker's earnings call last month that Tesla could produce up to 500,000 Model 3 sedans in 2019.

The back-and-forth comes more than four months after Musk settled an SEC fraud suit that claims he misled investors by tweeting about his plans to take Tesla private. He and the company paid fines of $20 million each as part of the settlement and Musk agreed to step down as chairman while remaining CEO. 

"Another boxing match with the SEC is the last thing investors wanted to see," Wedbush Securities analysts Daniel Ives and Strecker Backe wrote Tuesday in a client's note. "While the jury is still out around the direction this SEC court action could have on Musk's activities going forward, it will be a near-term overhang on shares until investors can better gauge the impact." 

After trading lower Tuesday morning, Tesla shares were lately holding steady at $299. 

Tesla's stock price is particularly important given the company has a billion-dollar debt payment due next month.

About $920 million in convertible senior notes expires March 1 at a conversion price of $359.87 a share. If Tesla shares remain below that price, the company will have to pay the debt in cash, wiping out almost a third of the $3 billion Tesla reported holding at the end of its September quarter.