Two Elon Musk Tweets Violated SEC Agreement – Report

EnterpriseFinancial MarketsManagementMarketingSocial lawsSocialMedia
elon musk, tesla, spacex

Casual tweeting habit of Tesla boss Elon Musk once again in the spotlight, after running afoul of SEC settlement agreement

The casual use of Twitter by Tesla CEO Elon Musk is once again in the spotlight, after two of his tweets reportedly ran afoul of an agreement with a US watchdog.

The US financial watchdog, the Securities and Exchange Commission (SEC), notified Tesla that two of Musk’s tweets from 2019 and 2020 – one about Tesla’s solar roof production volumes and one about the company’s stock price – hadn’t received the required pre-approval, the Wall Street Journal reported.

It should be remembered that for a number of years now, Elon Musk has been treading a very fine line with the SEC, which had sought to remove him as CEO and any executive position within Tesla.

Elon Musk

SEC clash

Problems began in August 2018, when out of the blue, Musk tweeted that he was considering taking Tesla private and that he had secured funding to do so.

Musk was almost immediately hit with two lawsuits which alleged that Musk’s Tweets were fraudulent effort to attack short sellers.

These tweets brought Musk to the attention of the SEC, which accused Musk of securities fraud, and alleged he made a series of “false and misleading” tweets about potentially taking Tesla private.

Indeed, the SEC sued Tesla and sought to ban Elon Musk from acting as an officer or director of a publicly traded company.

In the end, the US financial regulator forced Musk to step down as chairman of Tesla and pay $20m in penalties.

Musk however was allowed to retain the CEO role.

Musk also had to submit any public statements (including tweets) about the company’s finances to vetting by its legal counsel before publishing them.

And it should be remembered that Musk did not exactly endear himself to the SEC after he publicly attacked the watchdog – on two occasions. In December 2018 for example, Musk publicly admitted that he had “no respect” for the SEC.

And senior SEC officials were also not happy at Musk, feeling he got away lightly in the SEC agreement.

In May 2019 SEC commissioner Robert Jackson made clear he did not support the agreement reached between Musk and the SEC.

Offending tweets

Now according to the Wall Street Journal (WSJ), the SEC had informed Tesla that two tweets by Musk in the past two years had run afoul of its agreement that Tesla lawyers had to pre-approve certain posts he made on the social media site.

The WSJ cited records it had obtained, including a May 2020 letter written to Tesla by a top SEC official in the agency’s San Francisco office, saying Tesla had failed “to enforce these procedures and controls despite repeated violations by Mr. Musk” and that Tesla had “abdicated the duties” required by the settlement order.

The WSJ report did not identify the specific tweets at issue.

However, in July 2019, a tweet from Musk that Tesla was “hoping to manufacture ~1000 solar roofs/week by end of this year” immediately flagged concern about whether he had violated the agreement.

It is not clear at the time of writing what, if any sanctions, were taken against Elon Musk for the two tweets cited by the WSJ.

Pedo tweet

And Elon Musk’s casual use of Twitter has landed in hot water in other circumstances, most notably his controversial tweet about one of the rescuers of the Thai boy football team that were trapped in a flooded cave in 2018.

Indeed, Musk was sued for defamation by British cave diver Vernon Unsworth, over his ‘pedo guy’ tweet.

spacex

Musk personally apologised in court to Unsworth, and in the end a US jury found that Musk had not defamed Unsworth.

Read also :
Author: Tom Jowitt
Click to read the authors bio  Click to hide the authors bio