Tesla failed to oversee Elon Musk’s tweets as agreed in SEC settlement, report says
Electric car company had agreed to social media policy as part of SEC settlement
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Your support makes all the difference.Tesla failed to oversee Elon Musk’s tweets in violation of a court ordered policy, a report says.
The electric car manufacturer was warned by securities regulators that two of their billionaire CEO’s tweets were not approved by company lawyers, according to The Wall Street Journal.
Tesla had settled a 2018 enforcement action by the Securities Exchange Commission, which claimed that the entrepreneur committed fraud by tweeting about the possible buyout of the company.
Musk and Tesla both paid $20m settlements, and the company agreed to have its lawyers look at and submit some of his social media posts.
But in letters sent to Tesla in 2019 and 2020, the SEC complained that tweets by Musk on Tesla’s solar panel production numbers and stock price had not undergone the agreed vetting.
Tesla was told in a May 2020 letter by the SEC that it had failed “to enforce these procedures and controls despite repeated violations by Mr Musk.”
And in that letter the company was accused of abdicating “the duties required of it by the court’s order."
In 2019 the social media policy required by the SEC proved difficult to enforce, and a Manhattan federal court judge forced the two sides to clarify the subjects that needed pre-approval.
These included tweets about Tesla production figures, new business lines and their finances, reported the newspaper.
The SEC wrote to Telsa over Musk’s 29 July 2019 tweet, in which he wrote: “Spooling up production line rapidly. Hoping to manufacture ~1000 solar roofs/week by end of this year.”
Tesla told the SEC, which claimed it dealt with “production numbers or sales or delivery numbers”, that it had not been submitted as it was “wholly aspirational”.
In May 2020, Tesla’s share price fell after Musk tweeted: “Tesla’s stock price is too high imo.”
The company told the SEC, which said it addressed the company’s financial situation, that it had not reviewed the tweet as it was “personal opinion”.
“In the face of Mr Musk’s repeated refusals to submit his covered written communications on Twitter to Tesla for pre-approval, we are very concerned by Tesla’s repeated determinations that there have been no policy violations because of purported carve-outs,” the SEC wrote to the company.
In June 2020 the SEC told Tesla in a letter that it hoped to resolve the issues without further court action.
But Musk continued to mock the SEC, writing in a July 2020 tweet: “SEC, three letter acronym, middle word is Elon’s.”
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