SEC Slams Musk For Failing to Adhere To Tweet Approval Rule

SEC says Musk defense 'borders on the ridiculous'

Last month, The Securities and Exchange Commission has asked a judge to hold Elon Musk in contempt for violating a deal the regulator struck with the Tesla chief executive previous year, which requires him to get the approval of the Tesla board of directors before tweeting anything that could "be material to investors".

The Securities and Exchange Commission has approached a Manhattan court accusing Tesla chief executive Elon Musk of violating an agreement with the regulator that required him to seek approval from the company's board for any tweet that might affect Tesla's share price.

Going forward, new updates on Musk's ongoing legal battle with the SEC might keep Tesla investors on their toes.

The response follows the SEC's allegation that Musk's February 19 tweet about Tesla's production numbers was a violation of the agreement, and thus was a contempt of court. That order stems from a settlement reached between the SEC and Tesla in September over Musk's now-infamous "funding secured" tweet a year ago in which he said he was prepared to take the company private at $US420 per share. "As long as a statement submitted for pre-approval is not false or misleading, Tesla would presumably approve its publication without prior restraint on Musk", they wrote.

The last month has been busy for Tesla (TSLA). "The SEC requests that this court hold Musk in contempt and impose an appropriate remedy to ensure future compliance". Musk's lawyers promptly responded to the claims and asked for an extension to file a factual response no later than Friday.

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In a one-page letter to the judge, Hueston said the SEC raised new allegations in its reply, which he contends is improper. The SEC called the revelation "stunning".

He has said that the tweet was "celebratory and forward-looking" and that it did not contain any news that was not already available to the public.

The SEC accuses Musk of failing to have his tweets vetted and, instead, "unilaterally" deciding what is material information. Musk argued that he had used his own judgment to determine that his tweets did not contain material information-and that therefore the tweets didn't require review by Tesla's legal department.

It has learned since the publishing of the controversial February tweet that not only had Mr Musk not sought approval for that specific tweet - he has not sought approval for any of his social media posts since the settlement.

As of the closing on March 18, Tesla stock has fallen 15.8% in March.

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