Elon Musk, SEC settle again over his tweets

Elon Musk and the SEC on Friday reached another settlement over the Tesla CEO’s tweets.

Under a new proposed amendment to a settlement that both parties reached last year over other tweets by Musk — which cost him his position as Tesla’s chairman, plus a fine of $20 million each for Tesla and Musk — the chief executive’s written communications must be “pre-approved by an experienced securities lawyer employed by the company” when they concern topics listed by the Securities and Exchange Commission.

Those topics include the company’s financial information, possible mergers and acquisitions, and production and sales/delivery numbers. In addition, Musk must have pre-approval for tweets related to anything that requires the company to file an 8-K with the SEC, such as a change in control, executives or directors. Another limitation included in the list: “new or proposed business lines that are unrelated to then-existing business lines (presently includes vehicles, transportation, and sustainable energy products).”

Musk has tweeted about selling flamethrowers, and lately, leaf blowers.

The settlement does not mention an additional fine, which the SEC had broached as a possibility this year when it asked a court to hold Musk in contempt of last year’s settlement after a couple of his tweets in February.

Tesla did not return a request for comment Friday, the same day Judge Alison Nathan of the U.S. District Court Southern District of New York granted both parties an extension till next week, at their request, to resolve their differences.

In February, the SEC asked a judge to hold Musk in contempt of the earlier settlement he reached with the commission last year, in which he agreed to have his social media posts about Tesla’s business be pre-approved. That settlement came after the SEC charged him with fraud because he tweeted out last August that he had “funding secured” to take Tesla private, which gave a big boost to the company’s stock. That turned out to be false. The SEC sought to remove Musk as CEO, but under the settlement he ended up relinquishing his chairmanship of Tesla, and he and the company were fined. Tesla, Musk and the company’s board also face related shareholder lawsuits over the matter.

In October, days after that settlement, Musk continued to tweet, bestowing a new name on the SEC, “Shortseller Enrichment Commission.” In December, the Tesla CEO said during an interview on “60 Minutes” that he did not respect the SEC, and that his tweets are not supervised unless they can move the stock markets.

Fast forward to this year’s drama: Musk tweeted on Feb. 19 that “Tesla made 0 cars in 2011, but will make around 500k in 2019.” About four hours after the first tweet, Musk tweeted a correction: “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.” The SEC then asked that he be held in contempt, and Musk’s lawyers argued that his tweets did not contain information that wasn’t already known.