The U.S. Securities and Exchange Commission (SEC) is lashing out at Tesla Inc CEO Elon Musk who now complains it's trying to muzzle him into silence.
The continuing word war between SEC and Musk was triggered by Musk's tweets in February that wasn't cleared by the commission. At the core of the SEC's latest confrontation with Musk is the latter's tweet of Feb. 19 that said, "Tesla made 0 cars in 2011, but will make around 500k in 2019."
Tesla's stock fell by 5 percent after the SEC asked a federal judge earlier this month to hold Musk in contempt for making this statement. SEC told the judge Musk violated a September 2018 deal.
In a filing yesterday ( Monday), the SEC said it was "stunning" that Musk had continued to tweets about Tesla without consulting others at the company despite having agreed to a court-ordered settlement in September 2018 requiring him to do so.
The SEC cited the tweet from Feb. 19 where Musk said Tesla will build 500,000 cars in 2019. Musk later corrected this mistake by tweeting Tesla will build at an annual rate of 500,000 cars by the end of 2019, but will actually only make 400,000 cars this year.
Musk has been vocal about his criticism of the SEC, and SEC's latest salvo was bound to draw a reply from Musk, which he did last week. In a tweet last week, Musk argued his tweet of Feb. 19 didn't contain material information about Tesla.
He also said he diligently tried to follow the court settlement reached in October 2018. But he slammed the SEC, saying the commission's request he clears any tweet with them having to do with info that might affect investment decisions is a breach of his constitutional right to free speech.
The SEC dismissed Musk's claims in its Monday court filing.
"The pre-approval requirement was designed to protect against reckless conduct by Musk going forward," said the SEC.
"It is, therefore, stunning to learn that, at the time of filing of the [contempt] motion, Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the court-ordered pre-approval policy went into effect."
SEC believes Musk interprets the settlement "as not requiring pre-approval unless Musk himself unilaterally decides his planned tweets are material." It said such an approach is "inconsistent with the plain terms" of the settlement and makes the pre-approval requirement "meaningless."
The SEC also said Musk has "made no diligent or good faith effort to comply with the pre-approval provision of the court's order."
SEC also brushed aside Musk's argument his First Amendment rights are being violated. It pointed out that needing pre-approval for his tweets does not mean "that he is prohibited from speaking."
The U.S. District Court for Southern New York, which approved the original settlement in October, will decide if Musk's Feb. 19 tweet violated the deal.
