The financial regulator is trying to determine whether Elon Musk and his electric car maker complied with a revised settlement agreement that the agency struck with them in 2019. According to Tesla’s filing, the SEC is seeking information on the company’s “governance processes around compliance with the SEC settlement, as amended.”
The subpoena came shortly after the celebrity CEO polled his tens of millions of Twitter followers in the asking if he should sell 10% of his stake in Tesla. They voted yes. But a major portion of the sales that followed the Twitter poll were part of a plan that Musk adopted in September this year.
Shares in Tesla remained nearly flat in early trading, though another probe puts regulatory pressure on the automaker.
The dispute with the SEC over Musk’s tweets stretch back several years. In 2018, the federal agency charged Musk with fraud after he tweeted that he had “funding secured” to take Tesla private at $420 per share. The tweet sent Tesla’s stock see-sawing for weeks. The SEC also sued Tesla.
The company and Musk eventually settled with the SEC, with an agreement calling for a legal and regulatory compliance point person at Tesla (informally, a “Twitter sitter”) to pre-approve any of Musk’s tweets containing any information about the publicly traded company that could affect its stock price. Musk also had to relinquish the role of chairman of the board at Tesla for three years, and the company and the CEO each had to pay a $20 million fine.
In early 2019, when Musk tweeted about Model 3 production numbers, the SEC asked to hold the CEO in contempt of court, saying he had violated the initial settlement agreement. The tweet with the vehicle production numbers had not been pre-approved by Tesla attorneys.
A judge asked the two to settle their differences, which they did, clarifying the specific content Musk would need to have vetted by Tesla before posting on social media.
Musk has continued to use the social media platform spontaneously, and has remained cantankerous where the SEC is concerned. In 2020, he called the SEC the “shortseller enrichment commission,” and wrote a veiled profanity in reference to the agency.
On December 1, 2021, within weeks of receiving the newly disclosed SEC subpoena, Musk attempted to make light of whistleblowers in a tweet.
He invited his tens of millions of followers on Twitter to “blow the whistle on Tesla!” In the tweet, he shared a link to a web page where followers could buy a metal whistle shaped like the Cybertruck, an experimental pickup that Tesla first showed off in November 2019. (Production of the Cybertruck has been delayed until 2023.)
A week later, as Reuters first reported, the SEC confirmed that it was investigating a complaint from a former Tesla employee, Stephen Henkes, who said that the company knew of but failed to notify shareholders and the public about serious fire risks associated with its solar photovoltaic installations.