(The Street) Tesla traded lower Tuesday after the U.S. Securities and Exchange Commission asked a Federal court to hold founder and CEO Elon Musk in contempt for violating an earlier agreement on his use of social media.
The SEC said Musk's Tweet from earlier this month, in which he appeared to reveal material information on Tesla's production schedule, violated a September 2018 settlement that prohibited Musk from sharing company information without vetting from legal counsel. The settlement itself, reached through U.S. District Judge Alison Nathan, was linked to an August 2018 Tweet by Musk over plans to take the clean-energy carmaker private that the SEC said was misleading to investors.
"(Musk has) once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access," the SEC alleged in papers filed to the Federal court in Manhattan. "Musk has thus violated the court's final judgment by engaging in the very conduct that the pre-approval provision of the final judgment was designed to prevent."
Tesla shares were marked 2.2% lower in the opening minutes of trading Tuesday at $291.98 each, a move that would extend the stock's three-month decline to around 16%.
The SEC said it was concerned that a February 19 Tweet, in which Musk said that ""Tesla made 0 cars in 2011, but will make around 500k in 2019" before quickly adding "meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k" were not vetted by the company.
Musk appeared unrepentant on social media following the SEC filing, suggesting via Twitter late Monday that he was only sharing information about the company that had been publicly disclosed.
Musk was forced to relinquish his role as Tesla chairman following the SEC settlement, but told CBS's 60 Minutes program in December that it was "not realistic" to think new chairwoman Robyn Denholm could hold him to account as group CEO. He also said his Twitter account was not being monitored by company executives.
"It's not realistic in the sense that I am the largest shareholder in the company," Musk said when asked if his role in the company he founded would be subject to oversight from Denholm. "I can just call for a shareholder vote and get anything done that I want," adding that ""I want to be clear. I do not respect the SEC."
