US SEC asks judge to hold Tesla CEO Elon Musk in contempt
Elon Musk is in trouble with the SEC again as the agency asks to hold him in contempt for his tweets.
Tesla chief executive officer,(CEO), Elon Musk, is facing controversy again. The US Securities and Exchanges Commission (SEC) has asked a judge to hold Musk in contempt for tweeting without consulting his company first. Tesla stock has fallen by as much as 2% after the news.
Why does the SEC want to hold Elon Musk in contempt?
The SEC wants to hold Musk in contempt because of comments he made on Twitter. Musk recently tweeted about the number of cars that Tesla would produce.
‘Tesla made 0 cars in 2011, but will make around 500k in 2019,’ tweeted Musk.
The SEC said that his tweet was inaccurate. Even though Musk revised the claim in a later tweet, the agency asked a judge to hold Musk in contempt because the SEC felt he commented without prior approval from other Tesla executives.
They thought Musk’s comments violated a settlement he reached with the SEC after settling claims of alleged fraud in fall 2018. As a condition of the agreement, Musk has to get pre-approval before tweeting about the corporation.
‘Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people,’ wrote the SEC.
How will Elon Musk respond to the SEC?
At first, Musk responded well to the SEC’s court filing.
‘I have great respect for judges. It’s not perfect, but, in general, we should be very glad of the US justice system,’ said Musk.
However, Musk responded to a tweet from a supporter with a comment criticising the agency.
‘Something is broken with SEC oversight,’ said Musk in a tweet.
Wedbush Securities analyst, Daniel Ives, said that the conflict between Musk and the SEC could have a negative impact on Tesla stock.
‘Another boxing match with the SEC is the last thing investors wanted to see. It will be a near-term overhang on shares until investors can better gauge the impact,’ wrote Ives.
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