The Securities and Exchange Commission (SEC) requested a federal judge to hold Tesla Motors (NASDAQ: TSLA) CEO Elon Musk in contempt for violating the terms of their settlement agreement.
In September last year, the SEC filed a complaint against Musk for allegedly tweeting false and misleading statements about Tesla. Musk agreed to settle the charges.
The following month, the U.S. District Court for the Southern District of New York entered a Final Judgement against Musk. The Court ordered him to seek pre-approval of any written communications including social media posts relevant to Tesla or its shareholders. This requirement is part of the terms of the settlement deal between Musk and the SEC. Its purpose is to prevent him from “recklessly disseminating false or inaccurate information about Tesla.”
In a court filing, the SEC cited that Musk tweeted “inaccurate” information on February 19. He wrote, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” After a few hours, he corrected his tweet and explained, “Meant to say annualized production rate at end of 2019 probably 500k, ie 10k cars/week Deliveries for year still estimated to be about 400k.”
SEC says Musk admitted his violation
The regulator said Musk “did not seek or receive pre-approval” before publishing his tweet” as required by the Court. Tesla’s counsel confirmed that he failed to comply with the Court’s Final Judgement and the company’s policy.