The U.S. Securities and Exchange Commission are in federal court asking a judge to make Tesla CEO Elon Musk adhere to the rules of a 2018 settlement that limits how — and how much — he uses social media.
The two sides reached an agreement in 2018 that resolved a legal battle where securities regulators claimed Musk committed fraud by tweeting he planned to take the company private for $420 a share and he had the funding in place to do it.
Naturally, the stock went crazy, and then Musk later admitted he didn’t have funding and that the tweet was more a bad joke than anything else. Part of the settlement, requires Musk to get any of his social media posts, particularly tweets reviewed before he posts them.
Musk — unsurprisingly — has been rather blasé about having his tweets edited, but has largely stayed out of trouble with the SEC. However, that changed with a Twitter poll last November.
Big money poll gets big attention
Musk ended back on regulators’ radar when he decided to leave it to his Twitter followers to decided if he should sell 10% of his Tesla stock in order to pay his tax bill with the U.S. government, which was said to be about $15 billion at the time.
In all, about 3.5 million followers voted in the poll that saw 58% coming down in favor of selling stock. He promised to abide by the results; however, it’s not clear if he actually did.
However, that poll — likely not cleared by the Tesla legal team — had SEC lawyers charging into court. In the filing in federal court in Manhattan, the SEC rejected what it called Musk’s “substantively meritless” motion to quash a subpoena requesting records concerning his Twitter poll last November over whether to sell some of his Tesla stock, Reuters reported.
Long and unpleasant past
Musk and the SEC have long been at odds, but the fraud charges turned a tense relationship to basic hatred on the part of Musk. He’s called the agency a variety of unpleasant names, many of them playing off the SEC acronym. He and Tesla also paid $20 million fines.
The consent decree reached between the two parties requires Musk to get his social media posts cleared in advance by Tesla lawyers if they could material to the company. By his own admission, some of his tweets have walked the line, but he often acknowledges that with a chuckle.
Among other things dubbing it the “Short-sellers Enrichment Commission,” suggesting it was acting on behalf of investors betting on Tesla’s fall. Musk not only continued to thumb his nose at the agency but took a variety of steps that raised questions about his behavior – among other things smoking marijuana on a podcast with extreme comedian Joe Rogan.