Elon Musk’s Twitter Habit in Problem Again, Now Investors Sue Tesla CEO
The investors sued Musk to stop his "unchecked use of Twitter" for making "repeated misstatements" that they believe hurt Tesla and, of course, its shareholders.
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After the U.S. Securities and Exchange Commission (SEC) filing a contempt order against Tesla Inc CEO Elon Musk, over possible violation of a fraud settlement by tweeting material information without preapproval, sending the firm's shares down 5 percent, now the Tesla Investors have sued Elon Musk for his Tweeting habits. The investors sued Musk to stop his "unchecked use of Twitter" for making "repeated misstatements" that they believe hurt Tesla and, of course, its shareholders.
Earlier, the regulators accused Musk of fraud for making misleading tweets about plans to take the company private, and demanded that he be stripped of his CEO title. Musk, Tesla and the SEC settled the lawsuit, and part of the settlement called for any material statements made by Musk on social media to be vetted in advance by the company.
However, Musk’s tweet - "Tesla made 0 cars in 2011, but will make around 500k in 2019," led him to trouble again as SEC said that he did not seek or receive preapproval before publishing this tweet, which was inaccurate and disseminated to over 24 million people.
"Musk has thus violated the court's final judgment by engaging in the very conduct that the preapproval provision of the final judgment was designed to prevent," the SEC wrote in its motion in federal court in Manhattan. The motion asks the judge to issue an order that would put the onus on Musk to show why he should not be held in contempt for violating the settlement.
Musk corrected his tweet four hours later to say that the "annualized production rate" at year-end 2019 would probably be about 500,000, with deliveries expected to be about 400,000.
Tesla did not immediately respond to a request for comment, but Musk shot back on Twitter, tweeting: "SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing …". Musk was referring to comments made by him in January to analysts that Tesla would make "maybe on the order of 350,000 to 500,000 Model 3s, something like that this year".
With Inputs from Reuters
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