It takes far more than 280 characters to describe Tesla CEO Elon Musk ’s disputes with the US Securities and Exchange Commission.
Late Friday, Musk and the SEC reached a settlement in their latest clash over his tweets. The dispute stems from February, when the agency asked a federal judge to hold Musk in contempt of court for violating a September agreement that a Tesla lawyer would pre-approve all of his written communications—including tweets. In the new settlement, Musk and the SEC set stricter and more specific terms for Musk’s official Twitter babysitter, who Musk agreed would be “an experienced securities lawyer employed by the Company.” The latest settlement does not include any financial penalty.
Aarian Marshall covers autonomous vehicles, transportation policy, and urban planning for WIRED.
“This is a compromise,” says Jay Dubrow, a partner specializing in white-collar litigation at the law firm Pepper Hamilton. “The SEC put more specifics on what types of communications need to be cleared. Before, it was open ended.”
Tesla did not immediately respond to a request for comment.
The backstory: The September settlement resolved an SEC lawsuit against Tesla and Musk over a tweet , sent earlier in the summer, that said Musk had secured the funding to take the company private. That wasn’t true , and putting out false statements on any medium is a big no-no for the CEO of a public company. Prognosticators had predicted Musk might be banished from a leadership role at the electric automaker in punishment, but he got off easier than that: Musk and the company each shelled out $20 million in penalties, he agreed to step down as chair for at least three years while retaining his seat on Tesla’s board, and he said he would let a Tesla lawyer oversee all of his public communications. Including tweets.
For several months after the settlement, Musk’s lawyers would later argue in court documents, the social-media-loving Tesla head was very careful about his Tesla tweets. But the SEC said that changed in February, when it alleges Musk made another false statement on Twitter. “Tesla made 0 cars in 2011, but will make around 500k in 2019,” Musk wrote. About four and a half hours later, he corrected himself. “Meant to say annualized production rate at the end of 2019 probably around 500k, i.e. 10k cars/week. Deliveries for the year still estimated to be around 400k,” he tweeted as a corrective.
According to email communications between Tesla and the SEC later published by the court, that first tweet set off a scramble within Tesla, and the company’s Official Musk Communications Babysitter “immediately arranged to meet with Mr. Musk at the Fremont factory.” Later, Tesla admitted to the SEC that the tweet “was not individually pre-approved,” because Musk believed he was just reiterating already-public information about the company.
This latest settlement is designed to clear up any confusion about who’s allowed to tweet what when. In it, Tesla executives agreed to allow a company lawyer to pre-approve any written statements about the company's financial condition, potential mergers, production numbers, projections that haven’t been previously published, or new or proposed business lines.
Musk has gotten himself into a fair bit of trouble on Twitter, sometimes sending his company’s stock into a tailspin . He also tends to use the platform to give his lawyers something to do: Last summer, just a few weeks before the “take private” tweet that would cost him $20 million, Musk used the social media platform to accuse a British cave diver of pedophilia—and a Los Angeles judge just agreed to allow the diver’s defamation suit to move forward.
But Twitter has also helped Musk cultivate a passionate audience of fans who love his blunt, irreverent, and oft-sarcastic approach to, well, everything. (Count Twitter CEO Jack Dorsey as one of those.) Will another settlement convince the CEO to stop tweeting about sentient electric leaf blowers or engaging in public repartee with porn sites? Plenty are hoping it won’t.
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