Now he’s done it. Tesla CEO Elon Musk has drawn the ire of the Securities and Exchange Commission by breaking terms of a settlement agreement with a tweet. The agency asked a federal judge to hold the CEO in contempt after Musk wrote this tweet on February 19:
Tesla made 0 cars in 2011, but will make around 500k in 2019
— Elon Musk (@elonmusk) February 20, 2019
It’s that “will make around 500K in 2019” part that angered the SEC, which had this to say in legal papers filed with a Manhattan federal court: “He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access.”
The SEC says the tweet violated an agreement that was part of a settlement Tesla made with the regulator last year. Musk promised to consult with Tesla’s board before he made any statements on social media that could affect the stock price of the company. Tesla also agreed to pay $40 million in penalties and Musk agreed to step down as chairman of the board.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk’s sanctioning by the SEC originated with another tweet he posted last August, in which he dangled the idea of taking Tesla private at $420—a cannabis reference intended to impress his girlfriend, Grimes, the SEC alleged in September. The tweet sent the company’s stock price on a roller-coaster ride.
When asked about the SEC during a 60 Minutes interview on December 9, the Tesla CEO said, “I want to be clear: I do not respect the SEC, I do not respect them.” Up until then, he said, no one had reviewed any of his tweets posted since the SEC settlement. According to its terms, Tesla had until December 28 to implement procedures to review Musk’s business-related public statements. At the time, the company told Business Insider that it had such a policy in place.
Tesla shares lost roughly 5.5% of their value in after-hours trading on news of the SEC’s legal request.