New information is revealing that Elon Musk still has the Securities and Exchange Commission (SEC) on his behind acting like Twitter police over his tweets about Tesla.
Tesla, Elon Musk, and the SEC
Musk and the SEC have had a few run-ins with each other, and it was rarely with a good outcome.
Most famously, the SEC filed a lawsuit against Musk over his infamous “funding secured” comment regarding his failed attempt to take Tesla private back in 2018.
The Security and Exchange Commission (SEC) judged that Musk exaggerated when saying that the funding was “secured”:
Musk went on a campaign against the SEC, calling them names and claiming that they were working for people shorting the electric automaker.
Tesla and Musk ended up reaching a settlement with the SEC.
As part of the settlement, Musk agreed to step down from the role of Chairman of the board, and both Tesla and Musk had to each pay $20 million fines.
The CEO presumably didn’t want Tesla to have to pay for his issue with the SEC, and while he couldn’t directly pay for Tesla’s part of the fine, he decided to buy $20 million worth of shares from Tesla.
That way, he sort of indirectly ended up paying for Tesla’s fine – though he also ended up with ~71,000 additional Tesla shares in the process.
As we previously reported, Musk ended up actually making money from the settlement due to Tesla’s stock price surging last year.
Another part of the settlement was that Musk and Tesla had to agree for the former to have his tweets reviewed by the latter’s legal department if they are materials to the company.
SEC is now Twitter Police
Despite the settlement, Musk didn’t change his use of his popular Twitter account with over 56 million followers and as remained defiant when it comes to the SEC.
He nor Tesla ever disclosed any issue with the SEC regarding the Twitter stipulation in the settlement, but a new report from the Wall Street Journal reveals that the government is not happy with Musk’s use of the social media platform.
The publication uncovered correspondence from the SEC to Tesla about the issue via a federal Freedom of Information Act request:
“In correspondence sent to Tesla in 2019 and 2020, the SEC said tweets Mr. Musk wrote about Tesla’s solar roof production volumes and its stock price hadn’t undergone the required preapproval by Tesla’s lawyers. The communications, which haven’t been previously reported, spotlight the running tension between the nation’s top corporate regulator and Mr. Musk, who publicly mocked the SEC even after settling fraud claims with the agency.”
The SEC had issues with tweets that Musk made about a production target for the Tesla solar roof tiles and about Tesla’s stock being “too high”, according to Musk.
They asked Tesla for records regarding the tweets being approved, which the automaker admitted that they didn’t have.
Again, the SEC asked Tesla to enforce the stipulation in the settlement:
“The SEC told Tesla in May 2020 that the company had failed “to enforce these procedures and controls despite repeated violations by Mr. Musk.” The letter, signed by Steven Buchholz, a senior SEC official in its San Francisco office, added: “Tesla has abdicated the duties required of it by the court’s order.”
Back in 2019, the SEC did try to have Musk held in contempt over the settlement, but a judge instead had them clarify the scope of tweets that should be submitted for approval.
The agency seemingly hasn’t tried to go through the courts again to enforce the Twitter policing issue despite claiming that some tweets should have been reviewed by Tesla.
Electrek’s Take
Isn’t it kind of crazy that the SEC is acting as some sort of Twitter police?
Let me be clear, I’ll be the first to admit that Elon tweeted a few things that he probably shouldn’t have, but does it require having federal lawyers investigate them?
If he was outright lying sure, but if he is sharing some aspirational goals, let’s just take them with a grain of salt and be done with it. Otherwise, you are going to have to charge every optimistic CEOs in the world.
Also, if the fear is that Elon is pumping TSLA, why did they also have a problem with him saying that the stock was “too high”, which caused it to crash?
If Elon was using Twitter to pump Tesla’s stock, he is doing a poor job at it in my opinion.
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