Musk reaches settlement with US SEC over Twitter use

28 April, 2019, 05:24 | Author: Frank Williams
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Tesla Inc Chief Executive Elon Musk has reached a deal with the U.S. Securities and Exchange Commission to settle a dispute over Musk's use of Twitter, according to a court filing on Friday.

The terms of the agreement, filed in federal court in the Southern District of NY, dictate that Musk is required to seek legal counsel before posting any public statements, including tweets, regarding the electric auto company's finances and business operations that could impact investors' views of the company.

If approved by a US District judge the arrangement would mean that Musk could no longer be held in contempt of court.

In a settlement on Friday Mr Musk agreed to "obtain the pre-approval of an experienced securities lawyer" before making statements on topics including previously unpublished production numbers or sales or delivery numbers, new business lines unrelated to existing ones, projections or. CEO Elon Musk (C) exits after attending a S.E.C. hearing at the Manhattan Federal Courthouse in New York, April 4, 2019. Had Musk been found in contempt, the judge had the authority to impose hefty fines and new controls on how he communicates with the public.

"The Defendant must seek pre-approval of any written communication that contains information regarding a list of specific topics", the court motion submitted by Cheryl Crumpton, counsel for the SEC, said.

Musk settled the lawsuit, agreeing to step down as chairman and have the company's lawyers pre-approve written communications, including tweets with material information about the company. After an investigation, the regulator sued, saying Musk had misled investors.

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Tesla shares climbed as much as 1.6 per cent to US$238.88 at 6:10 p.m.in NY.

In the filing, the two sides said they agreed to make amendments to a deal they struck a year ago, laying out more clearly what communications require oversight and approval for Musk.

This past weekend, Musk repeated his February claim, responding to another Twitter user's post by tweeting "Tesla will make over 500k cars in next 12 months".

Musk's original deal with the SEC was announced last September. While the SEC expected Musk to begin regularly clearing tweets with lawyers, Musk interpreted this language as giving him significant discretion to decide for himself which tweets contained material information.

The regulator argued that Musk was required to have his tweet approved in advance under the terms of the settlement.

The case is Unsworth v Musk, 18-cv-08048, US District Court, Central District of California (Los Angeles).

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