SEC faults Tesla for oversight of Musk tweets: report

The Securities and Exchange Commission (SEC) told Tesla last year that its CEO Elon Musk had violated court-ordered policies twice on Twitter, according to records obtained by The Wall Street Journal.

In 2018, Tesla and Musk agreed that his tweets would be overseen by company lawyers as part of a settlement with the SEC over alleged fraud after Musk’s tweets about a potential buyout of his automobile company.

The Journal reports that in May 2020, the SEC told Tesla in a letter that it had failed “to enforce these procedures and controls despite repeated violations by Mr. Musk.”

The SEC stated that tweets from Musk about Tesla’s solar roof production volumes and stock price had not gone through reviews by the company’s lawyers.

In May, senior SEC official Steven Buchholz sent a letter to Tesla after Musk tweeted, “Tesla’s stock price is too high imo,” causing the stock price to fall.

Tesla told the agency that it had not reviewed Musk’s tweet as it was considered public opinion, but the SEC argued that his tweet had to do with the company’s financial condition and as such was subject to the policy.

“In the face of Mr. Musk’s repeated refusals to submit his covered written communications on Twitter to Tesla for pre-approval, we are very concerned by Tesla’s repeated determinations that there have been no policy violations because of purported carve-outs,” the agency wrote, according to the Journal.

“The serial nature of these investigations leaves us gravely concerned that the SEC is targeting Mr. Musk for an improper purpose,” Tesla attorney Alex Spiro wrote in a reply to the SEC.

This is the most recent development in the ongoing tension between Musk and the SEC, the Journal notes. Shortly after the settlement, Musk mocked the SEC on Twitter, writing, “Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!”

Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!

— Elon Musk (@elonmusk) October 4, 2018

This SEC-enforced policy is an unusual condition, the Journal notes, and it has been difficult to enforce from the start. The government agency has accused Musk of violating the rule multiple times since it was enacted in 2018.

The Journal notes that Musk and his companies regularly clash with regulatory authorities such as the National Transportation Safety Board (NTSB) as well as state Occupational Safety and Health Administration officials in Nevada.

Musk’s aerospace company SpaceX has also clashed with the Federal Aviation Administration (FAA) at times.

The regulatory skirmish in May appears to have ended in a stalemate, according to the Journal, with the SEC never going to court to ask a judge to intervene.

In a June letter, the SEC said to Tesla, “We urge the company to reconsider its positions in this matter by acting to implement and enforce disclosure controls and procedures … to prevent further shareholder harm.”