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Musk defends Tesla tweets that US SEC says violated court order
[MANHATTAN] Elon Musk told a New York judge that a pair of tweets he sent last month about Tesla Inc. weren't improper, refuting a request by the US Securities and Exchange Commission to hold him in contempt for violating earlier restrictions on his social-media posts.
The billionaire Tesla chief executive officer cited his constitutional right to free speech in his defence to the SEC claims on Monday in Manhattan federal court, meeting a deadline set by the judge. The SEC said his Twitter posts forecasting production of the company's electric vehicles were misleading and hadn't been vetted as required by an earlier order.
For Mr Musk, the stakes are high for his latest run-in with the securities regulator. Late last year, his Twitter musings about taking the company private resulted in US$40 million in fines, the appointment of independent directors, and replacement of Mr Musk as chairman. His settlement with the SEC also called for an in-house "Twitter Sitter" to approve future company-related tweets.
If US District Judge Alison Nathan finds Mr Musk in contempt, she's empowered to impose new fines, order additional controls on Mr Musk's social-media use, and even suspend or bar him from running Tesla or any other public company. Judge Nathan hasn't said when she'll rule on the request.
The risk of Tesla losing Mr Musk has spooked shareholders before. The company's market valued plunged by US$7.3 billion on Sept 28, the day after the the SEC sought to bar him from serving as an officer or director. The following day, Mr Musk and Tesla settled with the SEC and agreed he would step down as chairman for at least three years.
Legal experts say the SEC and the judge will probably try to avoid punishing Mr Musk in a way that harms shareholders, which means a permanent ban from running the company is unlikely.
The judge will evaluate posts Mr Musk made on Feb 19 to his 25 million Twitter followers, where he gave one figure for 2019 vehicle production and then amended it a few hours later.
Monday's filing comes after Mr Musk got a new legal team, turning to a firm led by former Enron prosecutor John C. Hueston, who is defending Mr Musk in a defamation lawsuit by British caver Vernon Unsworth, whom Mr Musk called a "pedo guy" in a tweet.
Mr Hueston's Los Angeles law firm replaces Williams & Connolly, the home of Dane Butswinkas, who quit his job as Tesla's former chief in-house lawyer last month to return to the white-shoe law firm.