Tesla, Elon Musk and the U.S. Securities and Exchange Commission reached an agreement on Friday that will give the CEO the freedom to use Twitter, within certain limitations, without fear of being rejected for violating an earlier court order.
Musk can Tweet however he wishes, except when it comes to certain events or financial milestones. In those cases, Musk must seek prior approval from a securities attorney, according to the settlement filed in federal court in Manhattan.
United States District Judge Alison Nathan, the presiding judge in this matter, has yet to approve the settlement. Nathan had given the SEC and Musk two weeks to resolve their differences and reach a resolution.
Musk should seek pre-approval if his tweets include:
- any information about the financial position or orientation of the company, possible mergers, acquisitions or joint ventures, or possible proposals,
- production numbers or sales or delivery number (actual, forecast or projected),
- new or proposed business lines that are unrelated to existing business lines at the time (currently includes vehicles, transportation, and sustainable energy products);
- projection, forecast, or estimate numbers regarding Tesla’s business that have not previously been published in official company guides
- events related to company securities (including acquisition or disposal of Musk shares)
- non-public legal or regulatory conclusions or decisions;
- any event that requires the filing of a Form 8-K, such as a change in control or a change in company directors; any chief executive officer, president, chief financial officer, chief accountant, chief operating officer, or anyone performing similar functions
The fight between the two parties began after Musk’s now-infamous tweet from August 7, 2018 that he had “secured funds” for a private acquisition of the company at $ 420 a share. The SEC filed a complaint alleging that Musk had committed securities fraud.
Musk and Tesla settled with the SEC last year without admitting wrongdoing. Tesla agreed to pay a $ 20 million fine; Musk had to agree to resign as chairman of Tesla for a term of at least three years; the company had to appoint two independent directors to the board; and Tesla was also told to establish a way to monitor Musk’s statements to the public about the company, including via Twitter.
The fight flared up again after Musk tweeted on February 19 for Tesla to produce “around” 500,000 cars this year, correcting himself hours later to clarify that he meant the company would produce at an annualized rate of 500,000 vehicles for end of the year. .
The SEC argued that the tweet sent by Musk violated their agreement. Musk has said the tweet was “irrelevant” and honored the agreement.
The SEC asked the court to disregard Musk for violating a settlement reached last October by Musk’s now-infamous “funding secured” tweet. The agency has argued that the SEC had argued that Musk was supposed to obtain approval from Tesla’s board before communicating potentially important information to investors. The SEC claimed that a tweet on February 19 violated the agreement.
Musk has firmly maintained that he did not violate the agreement.