Thanks to an agreement reached with the Securities and Exchange Commission (SEC) following a dispute over Tesla CEO Elon Musk’s tweets, a lawyer will have to vet some of his company-related tweets.
Musk and the SEC reached the agreement in a Manhattan federal court after U.S. District Judge Alison Nathan essentially ordered the two to figure it out following the SEC’s request that the judge hold Musk in contempt for a February tweet. Next, Nathan must approve the deal.
The tweet in question related to Tesla’s production figures, appearing to contradict values in a letter sent to company shareholders. Musk later corrected the tweet, noting he misstated the production number. Despite that, the SEC said in a court filing that Musk didn’t “seek or receive preapproval prior to publishing [the] tweet, which was inaccurate and disseminated to over 24 million people.”
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.
— Elon Musk (@elonmusk) February 20, 2019
Further, the SEC saw the tweet as a violation of an earlier settlement between it and Musk regarding the infamous “420” tweet.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
That settlement required Musk pay a $20 million USD (roughly $27 million CAD) and step down as Tesla’s board chairman. Musk later tweeted that the tweet was “worth it.”
Additionally, the settlement required Musk seek approval for some of his statements related to Tesla’s operations — a requirement Musk’s lawyer, John Hueston, claimed created a “murky policy” around the CEO’s tweets because of its vagueness.
Thankfully, the new settlement resolves that, stating Musk must “obtain the preapproval of an experienced securities lawyer employed by [Tesla] of any written communication” relating to company financial figures, statements, deals, legal decisions, forecasts, estimates or “such other topics as the Company or the majority of the independent members of its Board of Directors may request, if it or they believe preapproval of communications regarding such additional topics would protect the interests of the Company’s shareholders.”
In other words, Musk now has clear boundaries about what he can and can’t tweet regarding Tesla — something that’s likely best for both the company and Musk himself.