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Tesla's Musk calls SEC 'broken' in new Twitter spat

Tesla's Musk calls SEC 'broken' in new Twitter spat

Silicon Valley billionaire Elon Musk laid into the U.S. Securities and Exchange Commission again on Tuesday, after it accused the Tesla Inc chief executive officer of violating the terms of a settlement past year of fraud charges against him.

Tesla's stock dropped about 4% in after-hours trading on Monday.

The tweet read: "Tesla made 0 cars in 2011, but will make around 500k in 2019", an inaccurate claim which the SEC said had not been pre-approved by the board and was disseminated to over 24 million people.

Regulators say that Musk did not ask for or receive pre-approval before publishing the tweet, per the terms of the settlement agreement.

In another tweet about four hours later, Musk said, "Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week".

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 later found that Musk had not secured funding, relying on a verbal offer from the Saudi Arabian sovereign wealth fund (PIF). The follow-up tweet was drafted by both Musk and the company's so-called designated securities counsel.

The latest news could re-open the long running debate. Back in January, Tesla said it was aiming to hit a goal of turning out about 10,000 cars a week sometime between the end of 2019 and the middle of 2020.




"Musk has thus violated the court's final judgment by engaging in the very conduct that the preapproval provision of the final judgment was created to prevent", the SEC wrote in its motion filed on Monday in federal court in Manhattan.

But the cult of personality has also had a downside for Tesla, with Musk sending the stock into a tailspin after antics such as smoking marijuana during a podcast interview or insulting analysts on a conference call.

The court filing by the SEC requesting that Musk be held in contempt states "courts have inherent power to enforce compliance with their lawful orders through civil contempt".

The SEC contempt motion followed Musk's tweet to his more than 24 million Twitter followers on February 19: "Tesla made 0 cars in 2011, but will make around 500k in 2019", meaning 500,000 vehicles.

But Tesla's own policies now require communications to be reapproved by its attorneys if they are more than two days old, even if they are a verbatim restatement of a previous communiqué, the SEC said.

This leads us to Musk's tweets on February 19th. "Who knows?" He added: "Nobody's flawless". It pointed to his interview with CBS's "60 Minutes" in December, in which he said the he respects the justice system, he doesn't respect the SEC, and his tweets weren't being reviewed before he posted them.

Musk went on to say that "I do not respect the SEC ..."

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