May 26, 2022

U.S. securities regulators said Tuesday they have the power to call Tesla CEO Elon Musk over his tweets and urged a federal judge not to allow the executive to tweet with impunity.

Musk criticized the actions of the US Securities and Exchange Commission, which in 2018 required Musk to obtain prior approval for public messages related to Tesla, that is, wild tweets that “worry” and “worry” the stock price and shareholder value. perceived as “inappropriate”. action is called. I

Musk then agreed to a settlement with the SEC but came under fire again last year when he asked his Twitter followers if he should sell his 10 percent stake in Tesla, sending Tesla shares plummeting. Since then, Musk has sold about $16 billion worth of stock. Shortly thereafter, in November, the SEC issued a subpoena to determine whether Musk followed the previous agreement.

In response to the SEC investigation, Musk attempted to overturn or amend the 2018 consent decree, as well as cancel the subpoena to obtain records related to the November Twitter poll.

SEC regulator Melissa Armstrong wrote in a statement, “In 2018, in order to settle the SEC’s lawsuit against him, Musk agreed to follow Tesla’s mandatory procedures that require certain proactive public announcements regarding Tesla.” Application to federal court in Manhattan. Musk can no longer reverse the revised final ruling simply because he finds compliance with Tesla’s procedures less convenient than he expected, or because he doesn’t want the SEC to investigate whether Tesla’s controls and disclosure procedures were in fact implemented. . I

The dispute with the SEC stemmed from Musk’s August 2018 tweet that he had “secure means” to take Tesla private, but the purchase was not actually closed. US regulators said Tesla’s claims were fraudulent because they were “false and misleading”.

In the settlement, Tesla and Musk paid a civil penalty of $20 million each, and Musk stepped down as chairman of Tesla.

Musk has since accused the SEC of criticizing the government and punishing it for exercising its constitutional right to free speech under the First Amendment, complaining about the SEC’s “large number of demands” from 2018 to the present.

Armstrong wrote in a court document, “But his chronology of Musk’s alleged claims is disappointing and reflects Tesla’s and Musk’s legitimate investigations into new potentially infringing behavior, including the behavior that prompted SEC enforcement actions in 2018.”

Doubly, the regulator said that changing the 2018 final ruling would not exempt Musk from scrutiny of his Tesla-related tweets because “Musk, as a company official, will continue to be subject to Tesla’s controls and disclosure procedures.”

As long as Musk and Tesla use Musk’s Twitter account to disclose information to investors, the Securities and Exchange Commission may legally investigate issues related to Tesla’s disclosure controls and litigation, including Musk’s actions regarding Tesla’s tweets, as well as the accuracy Tesla’s public statements about her control. . procedures,” Armstrong said.

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