What is Really Going on Between Musk, Tesla and SEC?
Elon Musk, the founder and CEO of Tesla, the company and The US Securities and Exchange Commission have made it to the headlines again, it’s the same thing this time as was the case in September of 2018. Mr. Musk has been summoned by the court for an alleged tweet that does “repeated misstatements” and is “hurting the company” without following the communication procedures of the company and the investors don’t seem to take that really well.
This time around it’s regarding a tweet by Elon Musk that was published on February 19 which says “ Tesla made 0 cars in 2011, but will make around 500k in 2019”, it should be noted that Musk didn’t take any pre-approval from the company before publishing such figures and this is what is so concerning for the institutional investors who think Musk is hurting the company with his repeated misstatements.
This all started back in September 2018 when Musk tweeted about the plans for making his company go-private, something he abandoned weeks later but wasn’t taken very well by the investors who filed a lawsuit which ended in Mr Musk paying a hefty $20 million with the company paying a further $20 million, 3 years suspension from the Chair of Tesla, although still CEO and a settlement which would make it mandatory for him to get company-related tweets with serious dealings would be done under complete compliance with the company’s communications procedures. What more it did was make the stocks of the company lose a whopping 14% on NASDAQ because investors lost confidence.
The latest official statement from SEC for the latest case says “Musk has thus violated the Court’s Final Judgment by engaging in the very conduct that the pre-approval provision of the Final Judgment was designed to prevent” while filing an official motion against the founder in Federal Court in Manhattan. Although Mr. Musk has already clarified his intentions and corrected his tweets to say that “annualized production rates” at the end of 2019 would be around 500k with expected deliveries to be around 400k, the investors and the SEC seem to go all serious this time with lawsuit with some threatening repercussions for the man who himself built the company.
The motion asked the judge to put an onus that would bound Musk to tell the court why he should not be held in contempt for violating the last settlement, while Musk with his lawyers has defended his tweet by saying that this “single and immaterial” tweet to his force of 24 million followers doesn’t violate the company policy because he was just showing optimism and pride over the already revealed public statement. The case is still going on in court with judgment to be expected soon.
This time around it is the same case but with more serious consequences in store for the founder of Tesla and although it isn’t the greatest threat Elon faces since SEC could suspend or even ban him from running the company, it still adds pressure on him to control the reins of his twitter account.
As this all happens, the shares of the company suffer from repeated devaluation added to the struggles of making a profit out of the reduced price of the flagship Model 3. We can just wait and watch what happens to the otherwise charming and super-intelligent inventor, investor billionaire Elon Musk.
Summary: This article traces the history of the recent lawsuit involving Tesla, Elon Musk and SEC while also looking at the consequences a contempt ruling can have in store for the ever so enigmatic founder of Tesla, Elon Musk.
Article Source : https://cardealerlosangeles.com/blog/
