The Securities and Exchanges Commission (SEC) has argued a settlement reached in 2018 with Tesla and its CEO, Elon Musk, was breached at least twice.
In correspondence sent to Tesla in 2019 and 2020, SEC argued Tesla had failed to oversee Musk tweets as per the agreement after Musk tweeted: “Spooling up production line rapidly. Hoping to manufacture ~1000 solar roofs/week by end of this year.”
SEC went to court, asking for Musk to be held in contempt of court which is a criminal offense. Musk’s lawyers however argued the tweet was “wholly aspirational” rather than revealing as a matter of fact “production numbers or sales or delivery numbers.”
The settlement was modified to specify just what areas require pre-approval by lawyers, including communications about production figures, new business lines and the company’s financial condition.
In May 2020 SEC told Tesla it had failed “to enforce these procedures and controls despite repeated violations by Mr. Musk” adding that “Tesla has abdicated the duties required of it by the court’s order” after Musk tweeted “Tesla’s stock price is too high imo.”
Musk’s lawyers however argued that was just an expression of an opinion so it did not fall under the agreement.
Since then Musk has tweeted numerous market moving statements regarding cryptos, especially dogecoin, with the above pictured meme being just the latest.
However cryptos generally do not fall under SEC’s jurisdiction, so those tweets probably don’t fall under the agreement either.
This agreement reached after Musk said in 2018 he was going to take Tesla private at $420 is the first of its kind guarding what a CEO can say on public global forums by requiring pre-approval of statements from lawyers.
It’s not clear what the consequences of breaching the agreement are however, beyond potentially a fine, with a likewise agreement probably not possible where cryptos are concerned because they don’t quite fall under anyone’s jurisdiction.
So Musk nowadays mainly talks about rockets and bitcoin or dogecoin as SpaceX is private, so it does not fall under SEC either unlike the publicly traded Tesla.
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