Musk’s trigger-happy Twitter finger draws fire from SEC & drags down Tesla stock

Jermaine Castillo
February 27, 2019

The US financial regulator has asked a NY judge to hold Tesla boss Elon Musk in contempt for violating a settlement over social media comments.

Tesla did not immediately respond to a request for comment.

The SEC's move to hold Musk in contempt likely stems from a series of tweets from earlier in February. About 4 1/2 hours after that tweet, Musk corrected his statement, saying he meant that Tesla had started to manufacture cars at a weekly clip that would translate into 500,000 cars during yearlong period, but not necessarily for calendar 2019. Four hours later, he tweeted again that he "meant to say" the cars' weekly production rate would equal up to about 500,000 on an annual basis, but that the total auto deliveries this year would be closer to 400,000.

The problem? He isn't supposed to tweet about things that could impact markets and his publicly traded company.

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Musk tweeted to his 24 million followers on February 19 that 'Tesla made 0 cars in 2011, but will make around 500k in 2019'.

In its fourth-quarter shareholder letter, Tesla said that, barring unexpected challenges with the new Shanghai factory, Tesla targeted annualized Model 3 production of over 500,000 units sometime between the fourth quarter, and the second quarter of next year. The SEC and Tesla settled the lawsuit a month later in an agreement that left Tesla free from charges of fraud but which required Musk to step aside as the company's chairman and for him and Tesla to each pay a a $20 million fine. However, in December he revealed on the USA edition of 60 Minutes that that nobody is approving his tweets.

Musk is either playing games with the SEC, or simply doesn't care.

Instead, the attorney argued that Musk didn't need pre-approval, because Musk was merely repeating information Tesla put out previously.

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Musk provoked the SEC even after the settlement was signed, calling the agency the "Shortseller Enrichment Commission" on Twitter in October.

And in a December interview with CBS's "60 Minutes", Musk said he did not have respect for the SEC. The agency said the tweets were misleading because he didn't actually have a funding agreement in place for such a transaction.

Shares of the electric auto maker dipped 2.6 per cent to $291 in trading before the bell, signalling concern among investors that Musk had reopened his feud with the regulator. On Monday, he posted two memes, one suggesting that the only person he consults is himself and a freakish one about him laughing.

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