Tesla, Inc. (NASDAQ: TSLA)
Tesla stock is tumbling after the U.S. Securities and Exchange Commission (SEC) on Monday asked a federal judge to hold Tesla Chief Executive Elon Musk in contempt for violating the terms of a recent settlement agreement. Shares of the electric car maker fell as much as 5% in after-hours trading session Monday and were down nearly 3% in premarket trading Tuesday.
Musk tweeted on Feb. 19 that “Tesla made 0 cars in 2011, but will make around 500k in 2019.” A few hours later, the celebrity billionaire sent a follow-up tweet saying that he “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.”
The SEC claims that the tweet violated the terms of his October 2018 settlement with the agency that requires him to get preapproval from a company lawyer for all his social media posts as well as other written communication that would be material to shareholders or the company.
“Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people. Musk has thus violated the courts final judgment by engaging in the very conduct that the pre- approval provision of the final judgment was designed to prevent,” the SEC said in a filing with the U.S. District Court for the Southern District of New York.
Musk, 47, ran into trouble with the agency last year following his August 7 tweet when he said that he “considering taking Tesla private at $420. Funding secured.” The agency later revealed that he had not lined up funding for the take-private transaction and that he had not received any regulatory approval to do so.
The SEC sued Musk and Tesla over that tweet, saying he misled shareholders by lying he had secured funding needed to take Tesla private. However, both Tesla and Musk reached a settlement with agency, in which he agreed to pay a $20 million fine and quit his role as Tesla chairman.
As part of the settlement, Tesla agreed to establish a new committee of independent directors and implement controls and procedures to over Musk’s communications. The company also agreed to appoint two new independent directors to its board.
Tesla, Inc. Profile
Tesla, Inc. engages in the design, development, manufacture, and sale of fully electric vehicles, energy generation and storage systems. It also provides vehicle service centers, supercharger station, and self-driving capability. The company operates through Automotive, and Energy Generation and Storage segments. The Automotive segment includes the design, development, manufacture and sale of electric vehicles.
The Energy Generation and Storage segment includes the design, manufacture, installation, sale, and lease of stationary energy storage products and solar energy systems, and sale of electricity generated by its solar energy systems to customers. The company was founded by Jeffrey B. Straubel, Elon Reeve Musk, Martin Eberhard, and Marc Tarpenning on July 1, 2003 and is headquartered in Palo Alto, CA. – CNN Money