The SEC has asked a judge to hold Elon Musk in contempt for violating his settlement with the agency
The U.S. Securities and Exchange Commission asked a judge to hold Elon Musk in contempt for violating his October 16 settlement with the agency.
Bloomberg News first reported the news; we’ve since obtained the agency’s complaint, though it is declining comment. Tesla has not responded to our requests for more information.
At the crux of things: Last Tuesday night, Musk tweeted out to his 24 million followers that Tesla would produce “around” 500,000 cars this year, correcting himself hours later to clarify that he meant the company would be producing at an annualized rate of 500,000 vehicles by year end.
The next morning, Tesla announced that its general counsel, Dane Butswinkas, is leaving after just months on the job. Butswinkas said in a statement that he was “grateful for the opportunity” to work with Musk and Tesla and that he plans to return to the Washington, D.C. law firm for which he previously worked 30 years. A source meanwhile told TechCrunch last week that Tesla was a poor cultural fit.
Butswinkas had battled on Musk’s behalf with the SEC last year, after Musk infamously tweeted in August that he had “funding secured” to take the company private when he had not.
In the end, Musk and Tesla settled without admitting wrongdoing. Still, Tesla agreed to pay a $20 million fine; Musk had to agree to step down as Tesla chairman for a period of at least three years; the company had to appoint two independent directors to the board; and Tesla was also told to put in place a way to monitor Musk’s statements to the public about the company, including via Twitter.
In November, Tesla announced that Australian telecom executive and chair of Tesla’s audit committee Robyn Denholm would take over from Musk as chair of the company. In December, Tesla met another of the condition of the settlement, appointing two independent directors to its board: Larry Ellison, executive chairman of Oracle, and Kathleen Wilson-Thompson, executive vice president of Walgreens Boots Alliance.
It’s Musk’s admission that he didn’t obtain pre-approval for his tweet last week that the SEC considers “clear and convincing evidence that he violated the court’s final judgement,” with the SEC adding in its filing that he has “not diligently attempted to comply” with that specific ruling.
Perhaps unsurprisingly, Musk didn’t comment on the motion straightaway on Twitter, though he did write somewhat cryptically two hours before the news broke that “Fate loves irony. Frankly, too much.”
Musk was less circumspect last year, telling “60 Minutes” in a segment that aired in early December, “I want to be clear: I do not respect the SEC, I do not respect them.”
Fate *loves* irony. Frankly, too much.
— Elon Musk (@elonmusk) February 25, 2019
One suspects such public goading hasn’t won him many advocates within the agency.
Typically, if a person is found to be guilty of contempt of court, he or she may face a fine, jail time or other penalty.
You can check out the motion below.
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