Elon Musk Bristles at SEC Assessment of His Tweets

MANHATTAN (CN) – Elon Musk told a federal judge he plans to fire back after the U.S. Securities and Exchange Commission called his Twitter antics “stunning” in a Monday filing.

SpaceX founder and chief executive Elon Musk announces in Hawthorne, Calif., on Sept. 17, 2018, that the first private passenger on a trip around the moon will be Japanese billionaire Yusaku Maezawa. (AP Photo/Chris Carlson, File)

The 47-year-old tech billionaire and the agency have been at loggerheads since the summer when Musk tweeted about having the money to take the company private at $420 per share. As part of a $20 million settlement in September, Musk agreed to no longer tweet about business that could affect Tesla and its shareholders without preapproval from a company lawyer.

When Musk published a tweet last month that boasted about manufacturing expectations, the SEC pushed to have him held in contempt of court.

Musk published the tweet at issue on Feb. 19, telling his 24 million followers: “Tesla made 0 cars in 2011 but will make around 500k in 2019.”

Some four hours later, Musk backtracked from the estimate.

“Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week,” Musk tweeted. “Deliveries for year still estimated to be about 400k.”

On Monday, the SEC took aim at Musk’s defense to the allegations, which asserts that the tweet did not contain material information.

“Musk’s contention — that the potential size of a car company’s production for the year could not reasonably be material — borders on the ridiculous,” SEC attorney Cheryl Crumpton wrote in the memo.

Crumpton also notes that Musk only pivoted to his new explanation after the SEC filed its motion, having first attempted to argue that the substance of the tweet had already been appropriately vetted.

“Musk’s shifting justifications suggest that there was never any good faith effort to comply with the court’s order and the Tesla Policy,” she wrote. “Rather, Musk has simply elected to ignore them.”

Crumpton says Musk’s conduct is an overt snub to court authority. 

“It is … stunning to learn that, at the time of filing of the instant motion, Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the court-ordered pre-approval policy went into effect,” the memo states. “Many of these tweets were about the topics specifically identified by Tesla in its own policies as potentially material to shareholders. Musk reads this court’s order as not requiring pre-approval unless Musk himself unilaterally decides his planned tweets are material. His interpretation is inconsistent with the plain terms of this Court’s order and renders its pre- approval requirement meaningless.”

Musk’s attorney, John Hueston, said Monday the SEC’s new allegations would be answered best in a 10-page response brief.

“Musk would like to address the SEC’s unsupported assertions and submit documentation reflecting the negotiation history between the SEC and Mr. Musk and Tesla, which undermines the newly-presented interpretation the SEC sets forth in its Reply,” Hueston wrote Monday in a letter to U.S. District Judge Alison Nathan.

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