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Home / Business / Elon Musk and SEC now an agreement on tweeting

Elon Musk and SEC now an agreement on tweeting



Musk and federal regulators on Friday agreed to change an agreement that was adopted in October in October, which required supervision of Musk's social media use. The updated agreement describes a number of topics Musk can't tweet before he gets pre-approval from an "experienced securities lawyer."

Among these topics: Any information about Tesla's financial condition; potential or proposed mergers; production number or sales or delivery number; and new or proposed business lines. It also includes "non-public legal or regulatory findings or decisions", as well as any topic the company or its board may "request" if they believe that pre-approval "would protect the interests" of the shareholders.

It is much more specific than what was already in place. The original settlement contained a condition for Musk to get pre-approval before submitting social media, which contains information that is "material" for investors. Tesla plans to adhere to the allowed Musk to decide for himself when his tweets needed to get that pre-approval.

The updated decision has not yet been approved by federal judge Alison Nathan. Her thumb would be a beneficial result for Musk: If he lost this final match in his ongoing sweep with the SEC, Musk could have been in big fines or lost his job as CEO. The recently proposed terms do not impose any fines or penalties for his non-compliance.

Musk and SEC had been in each other's neck for months. The saliva came mostly because of Musk's frequent and informal use of Twitter, which he uses to not only chat with customers and share memes, but also to publish information about Tesla's views.

The latter is the kind of thing that first landed Musk in hot water with the SEC last year when he claimed in a tweet that he "considered" to take Tesla privately at $ 420 per share and that he had secured funding for the deal.

His tweet sent Tesla's ( TSLA ) shareholder. But the SEC later said that the funding was not actually secured, and it accused Musk in a lawsuit for misleading investors.

First, Musk signaled that he would fight the agency. But weeks later, regulators announced that he and Tesla had agreed to settle agreements that saddled them with $ 40 million in fines and demanded Musk to go down as the company's leader. He retained the role of CEO.

The agreement did not ease the tension. Since then, Musk has openly mocked the SEC, suggesting that the audit is "broken" and said he does not respect the agency.
Musk also said in a December interview with "60 minutes" that he would not allow all his tweets to be proofread, even though he insisted that he intended to comply with the settlement terms out of "respect" for the "justice system".
  Tesla lost $ 702 million last year and snatched its profit striker

The relative peace does not last long. Musk's latest legal battle with the SEC arose in February after the agency claimed that Musk broke up the deal when he tweeted that Tesla would make 500,000 total cars in 2019. Hours later, he managed to reach Tesla's 500,000 car per year production rate by the end of 2019 and delivers 400,000 cars this year.

After Musk posted this tweet, the SEC asked a federal judge to hold Musk contempt and said he had "not done a diligent or good faith service" to comply with the settlement. While Tesla admitted that Musk did not receive pre-approval for the February posts, the company has since claimed that he did not need it.

The two sides appeared in court on April 4, where Judge Nathan ordered them to put their "reasonable pants on" and attempting to settle their difference outside the courtroom. That was what eventually led to Friday's agreement.

"I think it's a very reasonable approach," said Marc Leaf, a securities partner at Drinker Biddle in New York and former SEC lawyer. "It recognizes that investors are clear enough to distinguish between tweets that are material information – and Elon is Elon."

Charles Elson, professor of corporate governance at the University of Delaware, disagreed. He said he believed the deal reflected the weakness of the SEC.

"When someone is disdained by the agency in this way, they must react strongly to keep their credibility with others accused of breaking" agreements, he said.

Tesla refused to comment.


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