Elon Musk takes swipe at SEC, claims agency is ‘broken’

Elon Musk lashed out at the Securities and Exchange Commission, claiming the watchdog is “broken” for demanding he be held in “contempt of court” over a second misleading Tesla tweet.

“Something is broken with SEC oversight,” Musk tweeted early Tuesday after the regulatory agency said in a court filing that Musk was in violation of his October promise to rein in his tweets.

But Manhattan federal Judge Alison Nathan is taking the SEC’s complaint seriously and ordered the billionaire head of Tesla to explain himself by March 11.

“Defendant Elon Musk shall submit to this court by March 11, 2019, briefing to show cause, if any, why he should not be found in contempt of the court’s final judgement,” Nathan wrote on Tuesday.

The judge was responding to the SEC’s filing late Monday calling for Musk to explain himself to the judge — causing the stock to drop in late trading, down 4.6 percent to $285 a share.

The agency’s gripe was over a Feb. 19 tweet by Musk saying Tesla expects to produce around 500,000 Model 3s in 2019. Four hours later, the billionaire updated the tweet to explain that the 500,000 figure was actually an annualized production rate.

The SEC said Musk’s tweet was a violation of his October agreement with them to stop “disseminating misleading or inaccurate information via Twitter or other means in the future.”

As part of the deal, Musk was supposed to stop tweeting about Tesla’s business without a lawyer’s approval. But his top lawyer bolted shortly after his Feb. 19 tweet about production.

“Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people,” the agency said in demanding the judge call on him to explain himself.

The SEC cracked down on him initially after he tweeted in August that he had “funding secured” to take Tesla private at $420 a share. The SEC said the claim was fraudulent and noted that it appeared to be an attempt to impress his then-girlfriend, the pop singer Grimes, with a marijuana joke.

The most extreme punishment that the judge could impose is barring Musk from being the officer of a public company — but it’s more likely he’ll get a “slap on the wrist” from the regulators, Sam P. Israel, a securities lawyer, told The Post.

“Contempt is a serious thing, but that’s really a radical response,” Israel said. “A fine and a warning that if he does it again, then there would be an officer and director bar” is more likely, he said.

While Musk’s tweets taunting the regulator aren’t going to help him, his earlier comments on an investor call that Tesla could produce 350,000 to 500,000 cars weigh in his favor, Israel said.

“He does have a point. The problem is that everything he’s doing right now is being scrutinized very carefully,” he added.

Musk called the SEC “broken” in response to a follower who complained that Musk’s latest misleading tweet didn’t move Tesla stock — the SEC did when it complained.

“Exactly. This has now happened several times,” Musk wrote.

Musk also “liked” that tweet, which called for an “enforcement committee that protects the small investor from the SEC enforcement committee.”

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Tesla shares were down 1.1 percent Tuesday morning, to $295.39.

 

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