The Securities and Exchange Commission or SEC is seeking to have Tesla’s CEO Elon Musk held in contempt for reportedly violating the settlement agreement. Musk posted a tweet recently that stirred up this court case.
This contention resulting in the stocks dropping on Monday by as much as 3 percent when the SEC filed a claim against Musk for not complying with the agreement reached with the Wall Street regulatory agency in late September last year.
The charge was filed on February 19, because the CEO tweeted that the car manufacturing company Tesla made zero cars in 2011, however they will manufacture approximately 500,000 in 2019.
He then re-tweeted a few hours after a correction, stating that he meant to say that Tesla’s annualized rate for the end of 2019 may be around 500,000 vehicles, or as he said a production rate of 10,000 vehicles each week, but the projected year end total is approximated at over 400,000.
In September, the Securities and Exchange Commission accused Musk of fraud in a civil lawsuit that charged him with lying or recklessly misleading the public, when he tweeted that he had “funding secured” to take the electric car company private at $420 per share.
Although Musk made the claim about taking the company private back in August 2017, the SEC reportedly stated that the CEO ‘had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source”.
After the charge was filed by the SEC in the federal courts in New York City, the CEO from Tesla settled with the Securities Commission and was ordered to pay $20 million dollars in fines and also to remove himself as the chairman of the board for 3 years, however, he remains the CEO.
The settlement agreement was enforced by the court on October 16 with documents that, “ordered Musk to comply with procedures implemented by Tesla that would require Musk to seek pre-approval of any written communications, including social media posts, that contained or reasonably could contain information material to Tesla or its shareholders.”
The Securities and Exchange Commission states in their claim on Monday that Musk “did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people.”
Elon Musk was given until March 11, 2019 to come up with an explanation as to why she shouldn’t be found in contempt, with respect to the court order filed against him on Tuesday.