The April 26 settlement was a serious matter: Musk could have faced sanctions for contempt of court if he failed to patch up the rift with the SEC over whether he was following the terms of an earlier settlement.
Tesla CEO Elon Musk is in trouble again with the Securities and Exchange Commission, this time over a 13-word tweet.
The SEC filed a motion in federal court on Feb. 25, claiming that a tweet that Musk sent out last week violated the terms of an agreement aimed at settling a securities fraud case brought last September. After the motion came to light, Tesla’s shares lost as much as 5 percent of their $298.77 market-close value in after-hours trading. The price crept back to somewhere around its previous level overnight, however, as traders digested the news.
It’s the latest in a series of ups and downs caused by Musk’s Twitter habit.
After falling 14 percent on Sept. 28, the stock rose 17 percent today, leaving the closely watched price at $310.70 at the close. That’s above the level it held during Sept. 27’s trading hours, just before the SEC announced that it was charging Musk with securities fraud.
Elon Musk has agreed to step down as Tesla’s chairman for three years but will remain CEO of the electric car maker, under the terms of documents filed today to settle a securities fraud case brought by the Securities and Exchange Commission.
In addition, Tesla agreed to appoint two new independent directors to its board, establish a new committee of independent directors and implement procedures to oversee Musk’s communications via Twitter and other avenues.
Neither Musk nor Tesla admitted wrongdoing as part of the agreement, according to court papers. But Musk will be required to comply with Tesla’s new procedures for social-media posts, updates on the company’s website and blog, and statements made in news releases or during investor calls.
Tesla would have to give “pre-approval of any such written communications that contain, or reasonably could contain, information material to the company or its shareholders,” according to court documents.
Tesla’s billionaire CEO and chairman, Elon Musk, is calling the Securities and Exchange Commission’s fraud claims against him “unjustified” after reportedly passing up a settlement deal that would have temporarily forced him from a leadership post.
“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said in a statement distributed Sept. 27 after the SEC filed its civil complaint. “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
The Securities and Exchange Commission has charged Tesla’s billionaire CEO and chairman, Elon Musk, with securities fraud over a series of controversial tweets focusing on the electric-car company’s future financial status.
If the SEC is fully successful in arguing its claims, Musk could be barred from serving as an officer or director of Tesla or any other publicly traded company.
The complaint in federal court focuses on what the SEC calls “false and misleading tweets” about a potential transaction to buy up Tesla’s publicly traded shares at a premium price of $420 and take the company private.