SEC Seeks Contempt Charge Against Musk

Tesla Inc. CEO Elon Musk faces a contempt charge for violating his settlement last October with the U.S. Securities and Exchange Commission.

The SEC wants a federal judge in New York City to sanction Musk for ignoring his agreement to stop misleading investors, notably by firing off impulsive and inaccurate tweets about the carmaker’s performance, Bloomberg News reports.

The SEC says Musk did just that on Feb. 19 by tweeting that Tesla would build “around 500K” vehicles this year. Hours later, after a meeting with a company lawyer, he tweeted that he meant Tesla would reach an annualized production rate of “probably around 500K” by the end of 2019.

Musk later taunted the commission by tweeting that he had mentioned sales of 350,000-500,000 during an earnings call on Jan. 30, adding “how embarrassing” for the SEC to have missed the earlier reference.

In asking the court to hold Musk in contempt, the SEC declared that he had “once again published inaccurate and material information about Tesla.” Experts note that a contempt ruling could lead to Musk being barred by the SEC from running Tesla or any other publicly traded company.

Last autumn Musk earned the commission’s ire by inaccurately tweeting that he was thinking about taking Tesla private and had the funding to do so. After admitting that no funding had been secured, he and Tesla each agreed to pay a $20 million fine.

Musk also agreed to step down as chairman for at least three years and to have a corporate committee review his tweets before they were posted.