The Securities and Exchange Commission has asked a federal judge to hold Tesla boss Elon Musk in contempt for tweeting last Tuesday that “Tesla made 0 cars in 2011, but will make around 500k in 2019.” In reality, Tesla only expects to produce 400,000 cars in 2019. And the SEC argues the tweet ran afoul of an October settlement requiring Musk to seek pre-approval from Tesla lawyers before tweeting out potentially market-moving information.
Musk agreed to this restriction to settle an SEC lawsuit over a previous tweet in which Musk claimed that he had “funding secured” to take Tesla private at $420 per share. The public soon discovered that Musk had not actually secured funding for such a transaction, and federal securities laws make it illegal for the CEO of a publicly-traded company to publish misleading market-moving information.
In his settlement with the SEC, Musk agreed to pay a $20 million fine and give up his position as the chairman of Tesla’s board (Tesla paid an additional $20 million fine). And to make sure Musk didn’t mislead investors again, the SEC required Tesla to develop a process for pre-approving all Musk tweets that contain potentially market-moving information.