The U.S. Securities and Exchange Commission (SEC) is pursuing a contempt order against Tesla Inc CEO Elon Musk, saying he violated a fraud settlement by tweeting material information without preapproval, sending the firm's shares down 5 percent. The SEC's request potentially could reopen a turbulent
SAN FRANCISCO - The U.S. Securities and Exchange Commission is pursuing a contempt order against Tesla Inc CEO Elon Musk, saying he violated a fraud settlement by tweeting material information without preapproval, sending the firm's shares down 5 percent.
In a court filing on Monday, the regulator pointed to a Musk Feb. 19 tweet:"Tesla made 0 cars in 2011, but will make around 500k in 2019," noting that Musk did not seek or receive preapproval before publishing this tweet, which was inaccurate and disseminated to over 24 million people. Musk corrected his tweet four hours later to say that the"annualised production rate" at year-end 2019 would probably be about 500,000, with deliveries expected to be about 400,000.
Tesla and Musk agreed in September to pay $20 million each to the SEC, and the billionaire stepped down as the company's chairman but remained as chief executive. In the settlement, the agency pulled back from its original demand that Musk, who is synonymous with the Tesla brand, be barred from running Tesla, a sanction many investors said would be disastrous.
"I want to be clear. I do not have respect for the SEC," he said, adding that he respected the justice system. Although the tweet was not pre-approved, the lawyer wrote, Musk believed its substance had been"appropriately vetted, pre-approved and publicly disseminated." Moreover, the lawyer said, the statement was made outside of market trading hours.
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