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- Tesla CEO Elon Musk has run into trouble with the Securities and Exchange Commission (SEC) twice in the past year after he tweeted in August that he had lined up a deal to take Tesla private.
- Musk settled with the agency in September after it alleged that he was not as close to acquiring funding for the deal as he indicated.
- In February, Musk tweeted a projection about vehicle production that the SEC says violated the terms of their settlement. The agency asked a judge to hold Musk in contempt of the court that approved the settlement.
- Attorneys for Elon Musk and the SEC will make their case before a judge in New York City on April 4.
Tesla CEO Elon Musk has run into trouble with the Securities and Exchange Commission (SEC) twice in the past year after he tweeted in August that he had lined up a deal to take Tesla private.
The SEC sued Musk over that tweet, arguing that Musk was not as close to acquiring funding for the deal as he indicated. Musk reached a settlement with the agency that required him to step down as the chairman of Tesla’s board of directors for three years, pay a $20 million fine, and receive approval for all future written communications that could be relevant to Tesla shareholders.
But Musk was not chastened by the settlement. In the following months, he lashed out at the SEC, saying he did not respect it. And in February, he tweeted a projection about vehicle production that the SEC says violated the terms of their settlement. The agency asked a judge to hold Musk in contempt of the court that approved the settlement.
Musk and the SEC have spent the past few weeks debating whether or not Musk’s February tweet followed the terms of their settlement.
Here’s what you need to know about Musk and the SEC’s fraught relationship.
Got a Tesla tip? Contact this reporter at mmatousek@businessinsider.com.
August 7, 2018: Musk says he has "funding secured" to take Tesla private
AP Photo/Mark Schiefelbein, Pool
Musk tweeted on August 7 that he had obtained the funding necessary to take Tesla private at $420 per share.
"Am considering taking Tesla private at $420. Funding secured," Musk tweeted before issuing a formal statement on Tesla’s website.
Musk said in the statement that a shareholder vote would have to be held before a final decision could be made. But he tweeted that investor support was confirmed.
Taking the company private was "the best path forward," Musk said in the statement. He said the pressures of being a public company created distractions and promoted short-term thinking that might not produce the best decisions in the long term.
Musk’s statements raised questions about the certainty of funding he referenced and where it would come from.
September 27, 2018: The SEC sues Musk
Lucy Nicholson / Reuters
The SEC filed a lawsuit against Musk in September, alleging that Musk made "false and misleading statements" in August about the possibility of taking Tesla private. The agency said in the lawsuit that it sought to bar Musk from being an officer or director of a public company.
In the lawsuit, the SEC claimed Musk said a representative from Saudi Arabia’s Public Investment Fund had shown interest in taking Tesla private, but that Musk had never discussed any of the specific terms he described on Twitter with the Saudi fund or any other potential backers before making them public. Those terms included the proposed $420 share price and an option for all existing Tesla shareholders to remain with the company after it went private.
Musk said he was "deeply saddened and disappointed" by the lawsuit, which he called "unjustified," in a statement to Business Insider.
September 29, 2018: Musk settles with the SEC
Rashid Umar Abbasi / Reuters
The SEC reached a settlement with Musk at the end of September. Under the terms of the settlement, Musk didn’t admit or deny the allegations in the agency’s lawsuit against him, but had to step down as the chairman of Tesla’s board of directors for three years, pay a $20 million fine, and receive approval for all future written communications that could be relevant to Tesla shareholders. Tesla also received a $20 million fine, despite not receiving fraud charges.
See the rest of the story at Business Insider
See Also:
- A DATE IS SET: A judge will hear arguments next month on whether Elon Musk is in contempt of court
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Source: Business Insider – mmatousek@businessinsider.com (Mark Matousek)