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Tesla CEO Elon Musk accuses the SEC of ‘leaking’ information

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The war of words escalates

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Elon Musk is escalating his war of words with the Securities and Exchange Commission, accusing the agency of “leaking” information from a federal investigation in retaliation against him for his public criticisms.

The accusation is contained in a new letter from Musk’s attorney Alex Spiro to US District Judge Alison Nathan, who oversaw the settlement between Musk and the SEC over his 2018 “funding secured” tweet that got him charged with securities fraud. It was the third letter in the past two weeks in a back-and-forth between Musk and the US government that shows little sign of abating.

In the most recent letter, Musk accuses the SEC of leaking information regarding a federal probe into his securities fraud case. Spiro writes (emphasis ours):

It has become clearer and clearer that the Commission is out to retaliate against my clients for exercising their First Amendment rights—most recently by criticizing the Commission on the public docket and by petitioning this Court for relief. Upon information and belief, after I filed the February 17, 2022 letter to this Court regarding the Commission’s conduct, at least one member of the SEC staff responded by leaking certain information regarding its investigation. This leak is emblematic of the vindictive, improper conduct that occasioned my letter: the SEC is retaliating against Mr. Musk and Tesla, without answering to the constraints of principle or law in so doing.

Spiro goes on to request that SEC staff “preserve their records and devices” and notifies Nathan that Musk’s legal team has “reported the matter” to the agency’s inspector general. He also states that he is seeking an “on-the-record assurance that the Commission has not leaked investigative details in violation of its own rules and policies, and is otherwise acting in accordance with the law.”

To be sure, Spiro doesn’t provide any evidence to back up his claim of leaked information. A spokesperson for the SEC declined to comment on Musk’s most recent letter.

The infamous “funding secured” tweet has loomed over Tesla for the past three years. After Musk sent the tweet, the SEC launched an investigation, eventually concluding that Musk misled investors about his plan to take Tesla private.

A year later, Tesla and the SEC agreed that Musk’s tweets about Tesla should be subject to more oversight. As per the settlement, a company lawyer was designated to pre-approve Musk’s tweets about Tesla’s financial health, sales, or delivery numbers — estimated or otherwise — as well as other specific subjects.

But that hardly settled the dispute. In February 2019, the SEC asked a federal judge to hold Musk in contempt for sending out an inaccurate tweet, arguing it violated the terms of the agreement. (Musk tweeted Tesla would make “around” 500,000 Model 3s this year, which appeared to clash with the company’s official guidance of delivering 360,000 to 400,000 cars total in 2019.)

Musk claimed the SEC was attempting an “unconstitutional power grab,” and the agency said the Tesla CEO was in “blatant violation” of the settlement. Eventually, the two sides were ordered by a federal judge to work things out.

But tensions escalated this month when it was revealed that the SEC had subpoenaed Tesla late last year over Musk’s tweets. Musk accused the SEC of subjecting him and his company to “endless, unfounded investigations” and alleged that the agency was ignoring its commitment to distribute $40 million in fine money to Tesla shareholders, as per the 2018 settlement. The SEC responded that it was still developing a plan to allocate the funds.