SEC says Musk defense 'borders on the ridiculous'


Musk's problems with the SEC began last August, when he tweeted: "Am considering taking Tesla private at $420".

"The preapproval requirement was created to protect against reckless conduct by Musk going forward", the SEC said in its filing on Monday. That order stems from a settlement reached between the SEC and Tesla in September over Musk's now-infamous "funding secured" tweet past year in which he said he was prepared to take the company private at $US420 per share. The agency is asking NY federal Judge Alison Nathan to hold Musk in contempt for tweeting a projection of 2019 vehicle output without first getting the tweet approved by Tesla's lawyers.

The agency emphasized that Tesla production forecasts have always been significant to market participants who follow the company. But Musk didn't have the funding secured.

"Musk made no diligent or good faith effort to comply with the pre-approval provision of the Court's order", the filing read.

According to CNBC, punishments that the SEC could pursue include more fines, seeking to have Musk's activities further restricted, or "removing him from Tesla's board or helm"-the last of which could seriously impact not just Musk but Tesla, which is struggling to keep its balance sheet in the black, something necessary to fund its lofty ambitions".

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[The SEC] dismissed Mr Musk's argument that he could decide which tweets about Tesla required preapproval by an in-house lawyer at the carmaker, arguing that he had a "demonstrated inability to discern potential materiality".

Musk's lawyers wrote last week that the February 19 tweet merely restated previously approved disclosures on electric auto production.

He has said that the tweet was "celebratory and forward-looking" and that it did not contain any news that was not already available to the public. He called the new assertions "unsupported" and asked to submit documentation about negotiations with the agency "which undermines the newly-presented interpretation the SEC sets forth in its reply".

The regulator last month alleged that Musk had violated a September settlement of fraud charges by tweeting material information about Tesla without pre-approval from the company.

Tesla has backed off a plan to close all its USA stores and said it will instead raise prices of its higher-end vehicles by about 3 percent on average.