Elon Musk has consented to more oversight on his tweets about Tesla. After weeks of negotiation, Musk and the Securities and Exchange Commission decided Friday that Musk should have a company attorney pre-approve tweets about Tesla’s financial health, earnings, or delivery amounts — estimated or otherwise — as well as other particular subjects, according to a new court filing.
The two sides filed Friday to amend the settlement agreement reached this past year over the “funding rdquo; debacle, which initially prompted the SEC to attempt to install oversight over Musk’s tweets. US District Court Judge Alison Nathan, who presided over the case needs to approve Friday&rsquoamendment.
According to the filing, Musk now needs Tesla’s securities attorney to pre-approve any people communication containing information about:
Tesla’s financial condition, statements, or results, including earnings or advice potential or proposed mergers, acquisitions, dispositions, tender offers, or joint ventures
production, earnings, or delivery amounts (estimated or actual ) that harbor ’t been shared, or ones which differ from Tesla’s official advice new or proposed lines of business unrelated to Tesla’s existing businesses (defined in the filing as “vehicles, transport, and sustainable energy products)
changes in the status of Tesla’s securities, credit facilities, or financing / lending arrangements
nonpublic legal or regulatory findings or decisions
anything which would require the filing of an 8-K form with the SEC, including changes in control of the company, or to its executive officers and directors
any other topic which Tesla — or even a majority of its independent members of the Business ’s board of directors — think needs pre-approval
This shift to the settlement agreement came after, on February 19th, Musk tweeted Tesla would make “around” 500,000 Model 3s this year. This clashed with the company’s official guidance of 360,000 to 400,000 cars complete in 2019 (including Model S and Model X).
Musk previously said the SEC was attempting an “unconstitutional power grab”
Musk corrected himself with a tweet a few hours later, but the SEC used this chance to ask Tesla for proof he was complying with the settlement. The agency discovered that Musk had not had some of his tweets about Tesla pre-approved by the attorney since the settlement went into effect in December.
On February 25th, the SEC asked to hold Musk in contempt of court for allegedly violating the settlement. Musk and the SEC spent the next few weeks filing scathing responses, with Musk saying the SEC was attempting an “unconstitutional power grab,” and the agency saying the Tesla CEO was in “blatant violation” of the settlement.
Eventually, Judge Nathan called Musk and the SEC to court on April 4th for a hearing where she ordered them to work out things . “Take a breath,” she said that day, “[and] come back with your reasonableness pants on. ”
The Tesla CEO initially got in trouble with the regulatory agency last September after he tweeted in August that he had been considering taking Tesla private once the company’s shares reached a price of $420. (Tesla has been a publicly traded company since 2010.) Musk said on Twitter he had “funds secured” buy any shareholders who didn & rsquo out and to pull the deal off;t want to stay with the business. These tweets were published by him while trading was occurring, and the company’s stock price.
The SEC swiftly began an investigation into Musk’s tweets. The commission ultimately found out that, while he had held a few meetings with Saudi Arabia’s autonomous wealth finance, Musk “’d never discussed a going-private trade at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private business via a ‘special purpose finance,’ and had not confirmed support of Tesla’s investors for a potential going-private transaction. ”
“Musk’s tweets caused marketplace chaos and harmed Tesla investors,” last year prosecutors said
“Musk’s tweets caused marketplace chaos and harmed Tesla investors,” prosecutors said.
The SEC approached Musk with a settlement in late September that he ultimately rejected. On September 28th, the SEC charged Musk with securities fraud in the Southern District of New York over his “false and misleading” tweets. Two days later, a settlement was reached by both sides. Musk has been forced to resign as Tesla chairman for three years, pay a $20 million fine, and agree to give an in-house attorney oversight on any public communications about the business, including his tweets, that could affect Tesla’s stock price (and, in turn, its shareholders).
One thing we heard in March as the two sides fought over whether Musk should be held in contempt is that, in the original settlement which the Tesla CEO turned down, the SEC wanted all of his public communications to be vetted — material or not. This was a sticking point for Musk, and the language got softened in the settlement’s version he consented to.
Friday’s filing brings the language closer to what the SEC originally sought. Musk will now be subject to oversight on a rash of specific topics related to Tesla, but he won’t need to have each tweet about the firm accepted.
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