Sunday , April 18 2021

Elon Mash reaches a settlement in the SEC tweet battle

Elon Mashk went out of the federal court on April 4, 2019 in New York.
Enlarge / Elon Mashk went out of the federal court on April 4, 2019 in New York.

Dare Anger / Getty Images

Elon Mashk has reached an agreement with the Securities and Exchange Commission, the parties said in a court filing Friday. The new agreement provides much more detailed guidance on when tweets and other public statements by Musk have to be approved by Tesla's lawyers.

Musk's initial contract for the SEC was announced in September last year. Muscle was to receive prior consent for tweets that "contain or may contain" information that is a material and legal jargon for information that is relevant to shareholders. While the SEC expects Mashk to begin regularly clearing tweets with lawyers, Moskow interprets this language as giving it a meaningful discretion to decide for itself whose tweets contain material information. As a result, he did not request a legal review of any tweets in the first few months of the agreement in force.

In February, Musk tweeted that Tesla "will make about 500k in 2019". A few hours later, he followed the tweet clarifying, saying "he wanted to say an annual production rate at the end of 2019, probably around 500k." Mosk does not receive this tweet by Tesla's lawyers. The SEC saw this as a violation of the agreement and asked Judge Nathan to keep Mascot disregard.

But instead of immediately punishing Musk, Nathan earlier this month ordered the parties to return to the negotiating table. Now, Musk and the SEC submitted a revision to the last September resolution, which is much more specific about what statements require a review of Tesla's lawyers.

Under the new rules, "Musk" must receive a Tesla paper attorney for tweets (and other communications) regarding Tesla's finance, its production and delivery numbers, new business lines, sales projections, proposed mergers, efforts fundraising, regulatory decisions and several other types of information.

The SEC says that if the judge waives these new conditions, the SEC will abandon the request for disrespect for the musk. In other words, the SEC appears to be satisfied with receiving Musk to seek a legal review of his tweets in the way the Agency considered the Mashot was doing the last time. The SEC does not want to punish Musk more about his February tweet.

But it is an open question whether Moscow will be more cooperative now than it was in the wake of the original agreement.

The new conditions require Musk to seek approval for production and delivery numbers – or projections for future numbers – unless those numbers were "previously published through previously approved written communications". However, Musk argued that when he envisioned the production of 500k vehicles, he was not supposed to receive a legal review because he only summarizes the guidelines previously announced by the company (the SEC disagrees, arguing that the number of 500k is incompatible with Tesla's leadership ). So it is not difficult to imagine that Musk continues to clean production estimates without legal review, arguing that they are close enough to Tesla's official instructions that he does not need the attorney's approval.

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