(April 29)Tesla CEO Elon Musk has finally agreed to more specific oversight of his tweets. On Friday an agreement was reached after weeks of negotiations between Musk and the US Security and Exchange Commission (SEC).
The two sides filed an agreement to amend the settlement agreement reached last year after Musk made misleading tweets about taking the company private. US District Court Judge Allison Nathan, who presided over the case, still needs to approve the amendment.
The original complaint
The original complaint against Musk is described in WIkipedia: "In September 2018, Musk was charged by the U.S. Securities and Exchange Commission for a tweet claiming that funding had been secured for taking Tesla private. The lawsuit characterized the tweet as false, misleading, and damaging to investors, and sought to bar Musk from serving as CEO on publicly traded companies.[116][117] Two days later, Musk reached a settlement with the SEC. As a result, Musk and Tesla were fined $20 million each, and Musk was forced to step down as Tesla chairman within 45 days while remaining Tesla's CEO.[118] Musk also proclaimed in several interviews since that he does not regret sending the tweet that triggered the SEC investigation."
In a tweet on August 7th last year Musk announced that he was considering taking Tesla private and he had funding secured to do so. He also later mentioned that Tesla was in talks with the Saudi Arabia wealth fund to potentially fund the effort but eventually abandoned the idea. Prosecutors claimed that in truth and in fact Musk had not even discussed much less confirmed key terms of any deal to take the company private with any funding source. The prosecutors said Musk's "funding secured" tweet was both false and misleading as were subsequent statements by Musk.
The revised agreement
While not all Musk's tweets need to pre-approved the new agreements requires Tesla's security lawyer to approve any Musk written communication that contains information about:
"Tesla’s financial condition, statements, or results, including earnings or guidance potential or proposed mergers, acquisitions, dispositions, tender offers, or joint ventures, production, sales, or delivery numbers (actual or estimated) that haven’t been shared, or ones that differ from Tesla’s official guidance new or proposed lines of business unrelated to Tesla’s existing businesses (defined in the filing as “vehicles, transportation, and sustainable energy products). changes in the status of Tesla’s securities, credit facilities, or financing / lending arrangements, nonpublic legal or regulatory findings or decisions anything that would require the filing of an 8-K form with the SEC, including changes in control of the company, or to its executive officers and directors, any other topic that Tesla — or a majority of its independent members of the company’s board of directors — believe needs pre-approval"
Musk did not obey terms of the earlier settlement
After the earlier settlement Musk issued a sarcastic comment about the SEC describing it as the "Shortsell Enrichment Commission". In a December interview Musk casually mentioned that although he had agreed to his tweets being monitored none had been censored. He also mentioned that he had no respect for the SEC.
The agency discovered in February of this year that none of his tweets had been approved by the Tesla in-house lawyer.
Musk's February 19 tweet
Musk tweeted that Tesla would make around 500,000 Model 3s this year. This figure appeared to clash with those in the company's official guidance which estimated there would be delivery of 360,000 to 400,00 cars total in 2019 and this would include Model S and Model X. Musk actually corrected himself a few hours later but the tweet prompted the SEC to ask Musk for proof that he was complying with the settlement. Musk had not a single tweet approved since the settlement came into effect last December.
The negotiations begin
On February 25th the SEC asked that Musk be held in contempt of court for violating the settlement. After the next few weeks of each side filing scathing responses, Judge Nathan called both Musk and the SEC to court on April 4th and said: “Take a breath [and] come back with your reasonableness pants on.” She ordered the two to work things out and then come back with an agreement. They finally have.
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