Tesla Inc. shares tumbled in after-hours trading Monday after the Securities and Exchange Commission asked a federal judge to hold Chief Executive Elon Musk in contempt over a recent tweet.
On Feb. 19, Musk tweeted: “Tesla made 0 cars in 2011, but will make around 500k in 2019,” clarifying a few hours later: “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.
— Elon Musk (@elonmusk) February 20, 2019
That tweet drew the ire of the SEC, which said in court papers filed Monday in federal court in Manhattan: “He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with internet access.”
The SEC said Musk and Tesla confirmed that tweet had not been pre-approved, as required by company policy and a court order.
“Musk has not made a diligent or good faith effort to comply with the provision of the court’s final judgment requiring pre-approval of his written communications about Tesla,” the SEC added. “While Musk claims to ‘respect the justice system,’ his deliberate indifference to compliance with this court’s final judgment indicates otherwise.”
A day after the Feb. 19 tweet, Tesla announced that its general counsel, Dane Butswinkas, had left the company after just two months, though it was unclear if the timing was related.
Last fall, Musk settled a fraud investigation with the SEC over another tweet — the now-infamous “funding secured” claim about going private— and as part of that deal agreed that Tesla would have oversight and pre-approval over his tweets that are material to the company. He also agreed to pay a $20 million fine and gave up his seat as Tesla chairman.
After rising 1.4% during regular trading Monday, Tesla shares
sank nearly 5% after hours. Tesla stock is down 10% year to date, and down 15% over the past year, compared to the S&P
gains of 11.5% and 1.8%, respectively, over those spans.
Tesla did not immediately respond when asked for comment late Monday. In a tweet Monday night, Musk said he had given 500,000 cars as a top-line production goal in Tesla’s fourth-quarter earnings forecast, and poked the SEC in the process.
“SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing.”
SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing … 🤗
— Elon Musk (@elonmusk) February 26, 2019