Elon Musk Could Face Suspension As Tesla, SEC Square-Off In Court

Tweet-happy Tesla CEO Elon Musk and a miffed U.S. Securities and Exchange Commission (SEC) get their day in court next week over the issue as to whether Musk should be held in contempt over one of his tweets.

Lawyers for Musk and the SEC will go head-to-head in a courtroom at the United States Court for the Southern District of New York to argue the pros and cons of an SEC contempt motion against Musk filed last week. U.S. District Judge Alison Nathan scheduled oral arguments on the motion for April 4 at 2:00 p.m. EDT (1800 GMT). Both sides earlier agreed they saw no need for an evidentiary hearing.

Musk is being accused by the SEC of violating his September 2018 fraud settlement with it by tweeting on Feb. 19 to his more than 24 million Twitter followers that Tesla could build 500,000 tesla electric vehicles (EVs) in 2019.

Musk later revised projections about Tesla’s manufacturing numbers for the full-year 2019 but the damage had been done.

The SEC argues this tweet was improper because Musk did not get advance approval from the board of Tesla. On the other hand, Musk’s lawyers contend the tweet isn’t material, and merely restated an EV production target for the Tesla Gigafactory 1 in Nevada Musk had discussed publicly in January.

In its court filing, the SEC noted that Musk “did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people.”

Former SEC lawyers and other securities lawyers cited by media said Musk looks to be in clear violation of the settlement. The lawyers for Musk and the SEC have refused to publicly comment about the case.

The settlement reached in September 2018 by Musk and the SEC intended to resolve a lawsuit over a Twitter post by the CEO on Aug. 7 in which he said he had “funding secured” to take Tesla private at $420 a share.

It also ordered Musk and Tesla to each pay $20 million civil fines, and for Musk to step down as Tesla’s chairman, which he did.

Legal experts said a contempt finding will see Musk fave a bevy of penalties. Among these are paying a much higher fine, more restrictions on Musk’s public comments, and even Musk’s removal from Tesla’s board or as CEO..

The case is SEC v Musk, U.S. District Court, Southern District of New York, No. 18-08865.