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Musk Faces U.S. Contempt Claim for Violating Accord With SEC

Musk Faces U.S. Contempt Claim for Violating Accord With SEC”

According to a new court filing, the SEC has asked a judge to hold Elon Musk in contempt of court for allegedly violating his settlement with the U.S. regulatory body by tweeting out potentially market-moving information.

The request made Monday in NY resurrects a dispute between the Securities and Exchange Commission and Musk that was supposed to have been resolved with a settlement reached five months ago.

The SEC is claiming that the tweet in question is inaccurate and violates the settlement Musk came to with the agency in 2018.

In a response to the SEC's demand for information regarding the February 19 tweet, a lawyer for Tesla and Musk said the CEO's tweet was meant to reiterate information already approved, then disseminated when the company released fourth-quarter earnings results in January.

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The settlement resolved an SEC lawsuit over another Twitter post in which Musk said he had "funding secured" to take his Palo Alto, California-based company private at $420 per share. The SEC is asking a judge to hold Musk in contempt, but it's yet to be seen whether that happens.

As a result, both Tesla and Musk paid a $US20 million dollar fine each and the latter stepped down as Chairman of the company, though still remained CEO.

The SEC said the fact that Musk didn't get pre-approval of the wording for the "evidently inaccurate" first tweet was a violation of the agreement.

The SEC referenced an "inaccurate" tweet (below) by Musk made on February 19 which publicly projected Tesla's production numbers for 2019. Specifically, Tesla's most recent earnings release stated that "we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020".

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Only more aggravating was the requirement that Musk seek approval from a newly-created overseer charged with reviewing anything he posts to social media, including Twitter.

It added that Musk had said in a letter to SEC staff afterwards that he was "cognizant" of the procedures - so the error wasn't down to a lack of clarity in the terms.

Musk responded, "I guess we might make some mistakes".

The case is SEC v. Musk, 18-cv-8865, U.S. District Court, Southern District of New York (Manhattan).

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Now it's up to the justice system to decide whether to take Musk to task over an ill-turned tweet. The regulator called for Musk to be held in contempt for violating a previous judgment related to his penchant to tweet info that runs afoul of securities rules.



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