Judge: Elon Musk and SEC regulator must resolve Twitter dispute themselves
A US federal judge has ruled that SEC and Tesla CEO Elon Musk must resolve their dispute between Musk’s Twitter use. Investors have previously sued Tesla over certain statements by Musk on Twitter.
According to Bloomberg, both Elon Musk and the SEC have been sent home with orders to end the feud between themselves. Both parties must send a letter to the court within two weeks whether they have reached an agreement. The judge must then approve it. If that is not possible, the judge will have to make his own judgment.
The case revolves around the legal principle of contempt of court, which applies in Anglo-Saxon countries, which in fact prescribes that judges and supervisory official bodies must not be insulted and that persons must behave respectfully towards them.
That principle was violated, according to the SEC, when Musk in February sent a tweet in which he reflected Tesla’s car production more favorably than could be achieved in reality. Although Musk was quick to correct this ruling, the SEC said this was price-sensitive information and in violation of a previous settlement between the two, requiring Musk to pay the SEC $20 million and resign from his position as chairman of the board. That settlement stemmed from a tweet from August last year, in which Musk said he was considering taking Tesla off the stock exchange.
Musk said in a statement that he was satisfied with the judge’s ruling. He said the tweet was “true-based, not directly harmful to shareholders and in no way a violation of last year’s settlement agreement.” He also said he has always believed that the dispute should be resolved between the SEC and not in court.
Former SEC prosecutor Elliot Lutzker told CNBC the SEC is unlikely to want Musk to resign as CEO. If the SEC does not make that requirement and no longer upholds the contempt objection, it is likely that Musk will have to pay another hefty fine, Lutzker said. That new fine will be higher than the previous $20 million fine.