SEC claims Tesla failed to oversee Elon Musk’s tweets
- 2nd June 2021
- Posted by: Hakeem
- Category: Crypto
According to records obtained by the Wall Street Journal (WSJ), the United States Securities and Exchange Commission (SEC) told Tesla, last year, that its CEO, Elon Musk’s use of Twitter had not once but twice violated a court-ordered policy requiring his tweets to be preapproved by company lawyers.
Elon Musk first caught the SEC’s attention in 2018, after he claimed on the popular social media platform, Twitter, that he had secured funding to take Tesla private at $420 per share. The SEC sued him for securities fraud, arguing that the tweet misled investors because the supposed deal to take Tesla private, was far from the truth.
Elon Musk quickly settled with the SEC to the tune of $20 million and under the terms of the agreement, Tesla promised to “put in place additional controls and procedures to oversee Musk’s communications.”
The deal with the SEC also called for Elon Musk to relinquish his role as Chairman and for Tesla to appoint two independent directors. Ultimately, the case was resolved without Elon Musk or Tesla admitting or denying wrongdoing.
The SEC reportedly wrote letters to Tesla in 2019 and 2020, pointing to a pair of tweets it said Tesla should have vetted beforehand under their agreement. A 2019 tweet in which Musk boasted about Tesla’s future production capacity, and the popular market-moving 2020 tweet in which he said Tesla’s stock price is “too high IMO.”
The SEC told Tesla in May 2020 that the company had failed “to enforce these procedures and controls despite repeated violations by Mr Musk.” The letter, which was signed by Steven Buchholz, a senior SEC official also added: “Tesla has abdicated the duties required of it by the court’s order.”
Elon Musk’s battle with the SEC is part of a pattern by him and Tesla of disregarding rules or avoiding enforcement attempts. This is evident with the company’s clashes with the National Transportation Safety Board and State Occupational Safety and Health Administration officials in Las Vegas, Nevada. Another company run by Elon Musk, SpaceX, also sometimes has a contentious relationship with the Federal Aviation Administration.
Tesla is trading at $623.90 currently down 0.21%.