US judge tells Elon Musk and SEC to work it out
Elon Musk and the US Securities & Exchange Commission (SEC) told a judge they need more time to resolve a legal fight over his tweeting habits. In a joint letter to US district judge Alison Nathan, Tesla's CEO and the securities regulator said talks over the past three weeks have yet to produce a settlement in their dispute over how Musk posts news about his electric-car company.
Nathan approved the plan on Friday, granting the second extension in as many weeks of her deadline for negotiations. The agency and Musk promised to update the judge on their progress by Tuesday.
The SEC had argued that a February 19 comment by Musk on Twitter violated an October 2018 settlement of an earlier brouhaha sparked by his proclamations on social media.
Musk said he didn't violate the agreement. The regulator asked the judge to find Musk in contempt of court, which could mean hefty fines and new controls on how he communicates with the public.
At a hearing on April 4, Nathan urged both sides to "put on your reasonableness pants" and work something out. Without an agreement, she said she will determine whether the billionaire should be held in contempt of court.
If the judge rules against the CEO, the regulator has indicated it will ask her to impose a series of escalating fines and monthly reports on Musk's tweets to keep him in line.
The judge had urged both sides to eliminate ambiguities in the earlier settlement that required Musk to get internal approval before issuing some tweets. A new compromise would help Musk avoid more penalties while the SEC affirmed his obligation not to release misleading information on social media.
Musk and the SEC have been fighting since he tweeted on August 7 2018 that he had "funding secured" to take Tesla private, sending the shares surging. After an investigation, the regulator sued, saying Musk had misled investors.
Musk and Tesla ended that dispute by agreeing to each pay $20m (R289m), without admitting wrongdoing.
As part of the October deal, they also agreed that any future social media posts by the CEO would be reviewed by a lawyer - known as Musk's "Twitter-sitter" - for any information that might affect investors' decisions.
The SEC said Musk violated that agreement when he tweeted in February that Tesla would make about 500,000 cars in 2019. He corrected that a few hours later, after consulting with the internal lawyer, with a tweet saying deliveries would reach only about 400,000.
The regulator argued that Musk was required to have his tweet approved in advance under the terms of the settlement. Musk's attorneys countered that the post wasn't material. Last weekend, Musk repeated his February claim, responding to another Twitter user's post by tweeting "Tesla will make over 500k cars in next 12 months".