Tesla Shares Plummet as CEO is In Hot Water Again With the SEC

Shares of electric vehicle maker Tesla were falling on Monday after the Securities and Exchange Commission asked a judge to hold the company’s CEO Elon Musk in contempt for violating its deal.

The stock fell 5% on the news. According to Bloomberg, the SEC cited an “inacurrate” tweet from February 19th from Musk over the company’s production.

Musk had tweeted that Tesla would make “around” 500,000 vehicles this year. Hours later he clarified that he “meant to say” the company’s annualized production rate at the end of 2019 could be around 500,000 vehicles.

Musk then said that total deliveries for the year are still estimated at 400,000.

The SEC wrote in a court filing, “Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people.”

Musk later tweeted, “SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing …”

He also tweeted, “Indeed. I have great respect for judges. It’s not perfect, but, in general, we should be very glad of the US justice system.”

The SEC wrote, “in response to the SEC’s February 20 request for information, Musk and Tesla state that, since Tesla’s Policy was implemented in December 2018, Musk’s tweets have been reviewed after their publication, but there is no suggestion that Musk has sought or obtained pre-approval of any tweet prior to publishing it.”

The agency also said, “For all the reasons stated, the SEC respectfully requests that the Court enter an order to show cause why Defendant Elon Musk should not be held in contempt of the Court’s October 16, 2018 Final Judgment.”

“This matter reaffirms an important principle embodied in our disclosure-based federal securities laws,” SEC chairman Jay Clayton said last September.

“Specifically, when companies and corporate insiders make statements, they must act responsibly, including endeavoring to ensure the statements are not false or misleading and do not omit information a reasonable investor would consider important in making an investment decision,” Clayton continued.

Disclaimer: We have no position in Tesla Inc. (NASDAQ: TSLA) and have not been compensated for this article.