The Securities and Exchange Commission asked a judge to hold Tesla Inc. (NASDAQ: TSLA) Chief Executive Officer Elon Musk in contempt for violation of a settlement deal, according to CNBC. Tesla shares edged about 1.5% lower on Monday morning before rebounding quickly by mid-day into the green.
The SEC cited a tweet from February 19th regarding Tesla’s production, first reported by Bloomberg.
Originally, Musk provided a tweet that said that Tesla made 0 cars in 2011, but expects to make 500k in 2019. Shortly after, Musk revised his tweet and posted that Tesla’s annualized production rate at the end of 2019 is expected to be around 500k, while deliveries for the year are projected to be about 400k.
The SEC wrote in court filings that Musk did not seek or receive pre-approval prior to the publishing his tweet, which reached over 24 million people. In response, Musk retorted back tweeting, “SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing …”
Musk has until March 11th to present him to the court and explain why he should not be held in contempt, according to the filings.
The SEC wrote in the filings that, “Musk and Tesla state that, since Tesla’s Policy was implemented in December 2018, Musk’s tweets have been reviewed after their publication, but there is no suggestion that Musk has sought or obtained pre-approval of any tweet prior to publishing it.”
The Commission concludes the filing by stating, “For all the reasons stated, the SEC respectfully requests that the Court enter an order to show cause why Defendant Elon Musk should not be held in contempt of the Court’s October 16, 2018 Final Judgment.”
This isn’t Musk’s first time running into a problem with the SEC. Last year, Musk was under fire after he proposed taking Tesla private. His move raised many questions and concerns, primarily regarding the funds. However, shortly after, Musk decided to abandon the plan and keep Tesla public.
The SEC quickly came after Musk, but the two settled charges very quickly. Musk and Tesla were both required to pay a USD 20 Million fine. Musk was stripped of Chairman title and had to also receive pre-approval for his tweets.