SEC Subpoenas Tesla over Settlement Regarding Musk’s Tweets

SEC Subpoenas Tesla over Settlement Regarding Musk’s Tweets

According to Reuters and CNBC, Tesla got a subpoena from the Securities and Exchange Commission in November 2021. The information was revealed in a financial statement by the manufacturer, which noted that the agency is specifically interested in its “governance mechanisms around compliance with the SEC settlement, as modified.” The subpoena was issued in November, just after Tesla CEO Elon Musk asked his Twitter followers if he should sell 10% of his stock in the business. Following that tweet, the automaker’s stock plummeted.

The SEC has been at battles with Tesla for years, beginning with a lawsuit filed against Elon Musk in 2018 for tweeting that the firm was going private. Musk’s tweet saying Tesla has already secured funds to take the firm private, according to the agency, constitutes fraud because it is a “false and deceptive” statement. Musk had to agree to have his social media posts containing material information pre-approved by a legal staff when Tesla reached a settlement with the SEC that year. Shortly after that, he tweeted previously undisclosed output numbers for 2019 without first consulting with his team.

The SEC tried to hold Musk in contempt of their 2018 deal, so they had to make changes so Musk knew exactly what he can and can’t say on Twitter. Tesla’s CEO is well-known for being an avid Twitter user. He utilizes the platform to convey updates and new announcements about his companies, like Tesla and SpaceX, in between memes and bizarre tweets. In 2019, a group of Tesla shareholders launched a lawsuit to halt his “unchecked” usage of the platform. Another investor sued Musk and the firm last year, accusing them of breaking the SEC agreement.

Musk continues to tweet “erratic” and unapproved remarks, according to the complaint, including one in May 2020 in which he declared Tesla’s stock price was “too high imo.” Musk has taken various breaks from Twitter over the years, claiming once that he had deactivated his account, but he is currently quite active on the network.

Elon Musk now knows exactly what Tesla information he can tweet without the Securities and Exchange Commission getting involved. According to The Wall Street Journal, US District Judge Alison Nathan has approved the agreement reached by the president and the commission a few days ago after a judge ordered them to resolve their issue outside of court. 

That agreement spells out what Musk isn’t allowed to post on the platform without first getting permission from the automaker’s lawyers. For example, he can’t just tweet about Tesla’s financial situation, planned mergers and acquisitions, or previously unseen forecast, production, and delivery data.