Tesla CEO, Elon Musk.
Matt Rourke/AP Photo
- Tesla was subpoenaed by the SEC 10 days after Elon Musk asked Twitter whether he should sell 10% of his stock.
- The regulator asked for information on Tesla’s governance process around compliance with a 2018 settlement.
- In the settlement, Musk agreed to have Tesla-related tweets vetted by a company lawyer before posting them.
Tesla was hit with a subpoena from the Securities and Exchange Commission soon after CEO Elon Musk asked Twitter followers whether he should sell 10% of his stock in the electric-car maker, a Monday filing showed.
The subpoena was issued on November 16, 10 days after Musk’s Twitter poll that triggered a sell-off in Tesla stock. A 10% stock sale would have been worth around $21 billion at the time.
Musk hasn’t publicly disclosed whether he ran his tweet by a company lawyer before posting it, a requirement laid down by the SEC four years ago.
Tesla said the writ was seeking information on “governance processes around compliance” with a 2018 SEC settlement and its subsequent amendment.
This action marks the latest development in an ongoing tussle between the US regulator and Musk, who caused turmoil for Tesla shareholders in 2018 with a separate tweet.
In August that year, Musk drew the SEC’s scrutiny onto the company when he said on Twitter that he was considering taking Tesla private and that he had the “funding secured” to do so.
—Elon Musk (@elonmusk) August 7, 2018
Musk defended the move after questions were raised about potential stock price manipulation. He said he felt tweeting about possibly taking Tesla private was the “right and fair thing to do” as he was confident a deal with Saudi Arabia’s wealth fund would close.
Eventually, Musk and Tesla reached a settlement with the SEC, which required him to step down as chairman for at least three years and pay a fine of $40 million.
An amended version of this settlement in 2019 shows Musk agreed he must not tweet anything “material” without prior approval from a company lawyer. This was meant to be related to information including Tesla’s financial condition, earnings or guidance, sales figures, or potential mergers.
But in 2020, the SEC told Tesla twice that it violated court orders regarding Musk’s Twitter use.
Musk’s lawyers recently said his tweet about having funding secured was “entirely truthful,” and that Saudi Arabia’s wealth fund had indeed agreed to fund a buyout of the company four years ago. He’s still taunted the agency even after the settlement, once calling it the “Shortseller Enrichment Commission.”
The Tesla billionaire told the Financial Times in December that he feels Tesla has been repeatedly and unfairly targeted by the SEC. “From what I can see they’ve done nothing to protect investors, small or large, from Wall Street short sellers,” he said.
Tesla was also hit by an investor lawsuit in December over Musk’s social media posts, including the one about selling stock that dragged shares 5% lower. By the end of the month, his super stock sale was just about done.
Tesla shares were last up 0.8% at $914.45 a share, and are down 14% so far this year.
Read more: After big slides for Meta, PayPal, Netflix and other major tech stocks, UBS lays out the 4 key things investors should do to make money this year despite the market turbulence
