Elon Musk’s legal group responded late Monday, just before a deadline, to the Securities and Exchange Commission’s petition to hold him in contempt of court over a tweet he left about Tesla’s production speed. In the filing submitted to a federal court in Manhattan, Musk’s attorneys say the tweet, posted last month, didn’t violate the conditions of an agreement Musk made with the SEC.
“The Securities and Exchange Commission’s petition that Musk be held in civil contempt for one, insignificant tweet that dutifully complied with the Order and with Tesla’s ‘Senior Executives Communications Policy’ is wrong on the facts and on the law,” the filing read. The policy refers to a court order that requires Musk to comply with Tesla’s pre-approval coverage for communications that might contain material information.
The tweet in question was posted by Musk on February 20 and stated Tesla would make about 500,000 cars this season. Musk followed it with a second tweet in exactly the exact same thread that explained Tesla’s annualized production rate at the end of 2019 would be approximately 500,000, or 10,000 cars per week, but deliveries were estimated to be about 400,000.
Meant to say annualized production rate at end of 2019 likely around 500k, ie 10k cars/week. Deliveries for year still anticipated to be about 400k.
— Elon Musk (@elonmusk) February 20, 2019
Musk’s attorneys write that he compiled with the coverage, which permits him to “exercise his reasonable discretion in the first instance to find out whether his communications include information requiring pre-approval,” but then posted the clarification after talking with Tesla’s disclosure counsel. His attorneys claim this “underscore[s] his diligence” in conjunction with the SEC settlement, including that Tesla’s projected production and rates of production for 2019 had been “publicly discussed in numerous documents and discussed at length in an earnings forecast. ”
Musk ran afoul of the SEC in August after tweeting that he had secured funding to take the company private. The SEC filed a complaint alleging securities fraud after Musk and Tesla’s board refused an earlier attempt at an agreement. As component of a settlement reached in October, Musk was allowed to stay Tesla’s CEO, but had to step down as board chair. The SEC also fined Musk and Tesla $20 million each and stipulated that Tesla had to exercise disclosure controls and procedures within Musk’s tweets.
In today’s court filing, Musk’s attorneys wrote that Musk, who just ahead of the settlement in October known as the SEC “the Shortseller Enrichment Commission” in a tweet, has since followed the settlement’s terms carefully and “dramatically reduced his volume of tweets generally and seeing Tesla in particular. ”
“This self-censorship,” they added, “is reflective of his commitment to adhering to the Order and avoiding unnecessary disputes with the SEC. ”
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