Regulators at the Securities and Exchange Commission said Tesla had twice failed to review Chief Executive Officer Elon Musk’s tweets as required in a 2018 settlement, emails have revealed.
The second had instructed the electric car maker to investigate all material public communications Musk had made about Tesla after accusing him of fraud following a tweet he sent in August 2018.
Musk had claimed he had “secured financing” to take Tesla private for $420 a share. It sent the company’s shares skyrocketing and forced trading to a halt.
Musk reportedly made $851 million after posting that tweet.
The Securities and Exchange Commission (SEC) has sued Musk for fraud over “false and misleading tweets,” claiming he chose the $420 price simply because the song is a marijuana reference that would “amuse” his girlfriend.
Musk was fined $20 million and forced to resign as Tesla chairman after reaching a settlement with the Commission.
But on two occasions, one in 2019 and another in 2020, the SEC alleged that Tesla violated the terms of the settlement, according to exchanges obtained by the Wall Street Journal.
Exchanges between Tesla and the Security and Exchange Commission show that the electric-car maker twice failed to properly vet tweets from its CEO, Elon Musk, as required by the terms of a 2018 settlement. Here, Musk is pictured overseeing on the construction of a Tesla factory in Gruenheide, near Berlin, on 17 May
The SEC says Tesla had to pre-approve this 2019 tweet regarding the production status of Tesla’s solar roof, as it fell under the production numbers category. The company said it disagreed
Regulators said Musk’s 2020 tweet about Tesla’s stock price needed to be vetted because it touched the company’s financial standing. Tesla’s lawyers said his tweet was an opinion
The tweets in question related to the production status of Tesla’s solar roof and the company’s stock price.
On July 29, 2019 Musk posted that Tesla was “rapidly winding up the production line” on the solar roof, and “hoping to produce about 1,000 solar roofs a week by the end of this year.”
On May 1, 2020, he tweeted: ‘Tesla share price is too high imo’
Initially, Tesla had to review all of Musk’s tweets under the settlement in which the company also had to pay $20 million.
In February 2019, the terms of the social media agreement were narrowed to require the company to review tweets only on certain topics. The topics were: production numbers, new products and Tesla’s financial status.
However, in May 2020, the agency said the company did not even meet those requirements with a letter to Tesla signed by senior SEC official Steven Buchholz stating: The Journal.
Regulators said Musk’s tweet about Tesla’s solar roof fell under the category of public release production figures for the company’s lawyers to investigate.
In response, Tesla said the chief executive had not submitted the tweet in question for review and that it later determined it was “completely ambitious” and thus did not require approval, the Journal also reported.
Tesla’s concept of its solar roof. The exchanges are another chapter in the ongoing feud between Musk, his company and the SEC
Despite the warnings, Tesla’s inability to monitor Musk’s tweets didn’t seem to affect him or the company.
When Tesla shares fell after Musk said he thought they were too high, regulators again asked whether Musk’s company had approved the tweet because they said it concerned Tesla’s financial condition.
The company replied that this was not the case and that it was a “personal opinion” and was not subject to the terms of the settlement.
The response prompted another reprimand from the agency.
“Given Mr. Musk’s repeated refusal to submit his covered written communications on Twitter to Tesla for pre-approval, we are deeply concerned about Tesla’s repeated determinations that there have been no policy violations due to alleged carve-outs,” the statement said. SEC. replied.
The Wall Street Journal obtained the exchanges through a Freedom of Information Act request. So far, neither Tesla nor the SEC have responded to the feud.
It seemed to end with no repercussions for the electric car manufacturer or its founder, and the SEC never went back to court with its complaints.
In June 2020, regulators seemed simply to ask if Tesla would do better.
“We urge the company to reconsider its positions on this matter by acting to implement and enforce disclosure controls and procedures…to avoid further harm to shareholders,” they wrote.
The billionaire is an extremely influential figure on Twitter, where he is followed by 56.3 million users.