U.S. SEC Commissioner Robert Jackson Decries Agency’s Deal with Tesla’s Elon Musk; SEC Had Previously Sued Musk for Alleged Fraudulent Statements
U.S. Securities and Exchange commissioner Robert Jackson recently criticized a settlement made between the regulatory agency and Tesla Inc CEO Elon Musk regarding Musk’s use of Twitter.
Musk, the head of the electric car maker, conversely argued that he was allegedly being punished because the settlement was too nebulous.
U.S. District Judge Alison Nathan approved the aforementioned deal that settled the tussle wherein the SEC had sought to find Musk in contempt of a securities fraud settlement last year.
The SEC had made previous arguments regarding tweets Musk published in February regarding production estimates, and that this equaled contempt of the 2018 settlement with the SEC Musk signed after writing on Twitter about possibly taking the company private.
The new and revised settlement was meant to clarify Musk’s responsibilities. It has not led to any further penalties (the original settlement came with fines and the removal of Musk from Tesla’s chairmanship), but Jackson has openly expressed his dismay in a public statement on the case:
Those who settle cases with the SEC must be held to the bargain they struck… Given Mr. Musk’s conduct, I cannot support a settlement in which he does not admit what is crystal clear to anyone who has followed this bizarre series of events: Mr. Musk breached the agreement he made last year with the Commission—and with American investors.
Robert J. Jackson Jr. was appointed to the U.S. Securities and Exchange Commission and was sworn in on January 11, 2018.
New SEC Deal States that Tesla Legal Counsel Must Review Musk Tweet Including Points about Financial Statements or Previously Unreported Production or Delivery Numbers
The new deal explains which kinds of statements by Musk must be reviewed by Tesla’s legal counsel before publication, including the following:
- financial statements
- previously unreported production or delivery numbers
- other topics
Events came to a head when SEC Regulators made claims that a February tweet by Musk regarding Tesla’s production numbers violated the earlier settlement, as it had not been vetted by the company’s attorneys, and Musk argued that the tweet was not material.
The SEC filed a lawsuit against Musk last year for making allegedly fraudulent statements after he composed a tweet on Aug. 7, 2018 that he had funding secured to issue a Tesla IPO at $420 per share.
Shares of Tesla have recently slumped 2.3% to $233.19, whilst the S&P 500 overall was little changed. This was perhaps because Jackson’s note indicates that some regulators are not satisfied with how the case was solved.
Other factors perhaps contributed to the drop, including:
- a New York Times report saying the company is cutting prices on its residential solar equipment
- coverage of a lawsuit against Tesla filed by a man whose family alleges that he died in a crash caused by the car’s navigation system failure