Elon Musk is in hot water with the SEC again and Tesla’s share price has taken a hit as a result, again. The SEC has asked a New York judge to find him in contempt of court after he broke a ban on making any social media statements that could potentially impact investor sentiment on Tesla. The company’s share price slumped over 5% in afterhours trading after the news broke.
In September Musk was forced to stand down as the chairman of Tesla, the company he co-founded and has been the driving force behind, as a result of a settlement with the SEC. He also paid a $20 million fine.
Musk ‘tweeted’ that he would take Tesla private to escape what he described as the short-termism of capital markets and in response to the heavy short positions taken out against the company, which he perceived as an active attack by markets. He also tweeted he had the funds in place to do so. Tesla’s share price soared as a result, costing short-sellers millions. It subsequently turned out the funds to take the company private were not in place at all and he quickly backtracked on the stated plan.
The SEC charged Musk with fraud, eventually reaching the settlement that included Musk resigning as chairman, paying the fine and agreeing to not make any social media comments on company activity before first getting approval. But Musk has taken to Twitter again. The tweet, which included an aerial photograph of new Tesla vehicles and a claim he expected 500,000 to be manufactured this year, is thought to be in breach of his social media gagging order. The SEC also claims the information it portrayed was inaccurate.
In the motion filed on Monday at a federal court in Manhattan, the SEC claimed:
“Musk has thus violated the Court’s Final Judgment by engaging in the very conduct that the preapproval provision of the Final Judgment was designed to prevent.”
Musk denies the accusation on the grounds the same information was published in a transcript of a call with financial analysts that was part of the company’s Q4 earnings report. He also sent a second tweet contextualising the first, which read:
“Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
Whether or not the judge rules in favour of the SEC or Musk in this particular instance, investors in Tesla will no doubt be praying that the enigmatic entrepreneur manages to keep a lower profile in future. A target the sceptical might say is as realistic as many of Tesla’s over the past few years.