Tesla CEO Elon Musk denies violating SEC fraud settlement
Musk's lawyers said the SEC was broadly overreaching reaching with its request.
In documents filed Monday, the attorneys said Musk's Feb. 19 tweet was a restatement of prior disclosures and that it didn't violate a 2018 settlement with the SEC.
"Musk has dramatically reduced his volume of tweets generally and regarding Tesla in particular," the attorneys wrote in their response to the SEC. "This self-censorship is reflective of his commitment to adhering to the order and avoiding unnecessary disputes with the SEC."
"The 7:15 tweet was a celebratory, aspirational, and forward-looking statement on a topic that had been the subject of multiple written disclosures by Tesla," they added.
The lawyers also accused the SEC of censorship and of violating Musk's First Amendment rights.
The SEC said Musk violated the terms of a September settlement with his "inaccurate" tweet last month about the company's manufacturing projections and asked a judge to hold him in contempt of court.
"Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people," the SEC said in a filing with the U.S. District Court for the Southern District of New York last month. "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."
The billionaire CEO shocked investors on Feb. 19 when he tweeted that the company would "make around" 500,000 vehicles this year, soaring past previous estimates.
Musk clarified the statement about four hours later with another tweet, saying he "meant to say" the company's annualized production rate would come in at around 500,000 vehicles for the year. He said deliveries for 2019 are still estimated at 400,000.
His attorneys said Musk "used his discretion" to determine that the tweet did not require pre-approval.
Musk agreed to "seek pre-approval of any written communications, including social media posts, that contained or reasonably could contain information material to Tesla or its shareholders," according to the filing.
The parties made the agreement last fall after Musk tweeted about a now-aborted plan to take the company private at $420 per share.
"Musk's tweets caused Tesla's stock price to jump by over six percent on August 7 and led to significant market disruption," the commission said in the filing. "Two days after the SEC filed its complaint against Musk, it reached settlement agreements with both Musk and Tesla."
"In turn, Tesla, as one condition of its settlement with the SEC, agreed to implement mandatory procedures to oversee and pre-approve Musk's Tesla-related written communications that reasonably could contain information material to the company or its shareholders," it added.