US judge orders talks between Tesla’s Musk, securities regulators

Elon Musk speaks at a news conference at the Kennedy Space Center in Cape Canaveral, Florida March 2, 2019. — Reuters pic
Elon Musk speaks at a news conference at the Kennedy Space Center in Cape Canaveral, Florida March 2, 2019. — Reuters pic

NEW YORK, April 5 — A federal judge yesterday gave Tesla chief executive Elon Musk and US securities regulators two weeks to resolve their differences over Musk’s prolific social media use.

The Securities and Exchange Commission had said Musk should be held in contempt of court for allegedly violating an earlier settlement on tweeting potentially market-sensitive information.

US District Judge Alison Nathan told the parties to report back — while suggesting the SEC reconsider its threat which she said “carries a significant burden.”

“I am requiring you to meet and confer for at least an hour,” Nathan said.

Musk told CNBC on the courthouse steps he was “impressed” with the judge and would “most likely” be able to resolve his differences with the SEC.

An October agreement required Musk to step down as chairman and pay US$20 million (RM81.6 million) to settle charges he defrauded investors with false claims on Twitter in August about a possible go-private transaction that was quickly aborted.

The settlement, which allowed Musk to remain as CEO, required him and other senior officers to obtain pre-approval from Tesla counsel before making written communications “that contain, or reasonably could contain, information material to Tesla or its stockholders.”

The SEC revived its action after Musk tweeted on February 19 that Tesla would make 500,000 cars in 2019 — up from the 400,000 that the company had estimated until then, an apparent increase on a benchmark tied to profitability.

Musk corrected himself four hours later, saying that Tesla would indeed produce about 400,000 cars this year.

The SEC said the inaccurate information should lead to his being held in contempt.

Musk’s removal as CEO is not seen as a very likely result of the latest fight, although a finding of contempt could make such an outcome more likely down the road. 

A negative ruling could also increase investor pressure on Musk to appoint a chief operating officer to share responsibility for managing a company that has suffered from near-constant turnover. — AFP

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