The Securities and Exchange Commission believes Elon Musk has violated his 2018 settlement agreement twice, according to correspondence obtained by The Wall Street Journal between the SEC and Tesla. The agreement requires a lawyer to approve his tweets about the company.
Tesla lawyers didn’t review Musk’s May 2020 tweet about how Tesla’s stock price was “too high imo” before he published it. The company’s lawyers also didn’t approve a July 2019 tweet about Musk’s goal to make 1,000 of Tesla’s solar roofs per week by the end of that year. The SEC sent the letters to Tesla in 2019 and 2020 shortly after each tweet, but has not taken any apparent enforcement action against Musk or the company.
“Tesla has abdicated the duties required of it by the court’s order.”
Musk originally found himself in hot water with the SEC in August 2018 after he infamously tweeted he had “[f]unding secured” to take Tesla private at a price of $420 per share. (He did not, and had only held preliminary talks with Saudi Arabia to fund such a move.) The agency charged him with securities fraud in September, and the two sides quickly settled. Musk agreed to step down as chairman of Tesla, and also agreed to have his public communications (aka his tweets) vetted by the company.
In early 2019, though, the SEC asked a judge to hold Musk in contempt of court for violating the original settlement. Musk tweeted an estimate for how many cars Tesla would make that year that was higher than the company’s official guidance. The SEC discovered that Tesla’s lawyers had not approved the tweet, and took Musk and his company back to court. The two sides ultimately agreed to more specific vetting of Musk’s tweets about Tesla, especially around production, sales, or delivery numbers.
The SEC wrote Tesla in August 2019 about the solar roof tweet, arguing it was a clear violation of the amended settlement terms. But Tesla said in response that Musk’s estimate was “wholly aspirational.”
“Tesla has abdicated the duties required of it by the court’s order,” Steven Buchholz, one of the SEC’s enforcement officials, wrote to Tesla in May 2020 in the letters the WSJ obtained. It was in response to the stock price tweet. Tesla responded that the tweet was simply Musk’s opinion.
Musk went on 60 Minutes in late 2018 to say that no one has been approving his tweets despite the settlement. His public attitude toward the agency hasn’t changed much from the open scorn Musk expressed on 60 Minutes. Last July, he tweeted, “SEC, three letter acronym, middle word is Elon’s.”