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Tesla Subpoenaed by SEC About Complying With Musk Settlement (2)

Feb. 7, 2022, 2:44 PM

Tesla Inc. received another subpoena from the U.S. Securities and Exchange Commission about a subject that keeps coming up: Elon Musk’s tweeting in 2018 that he was considering taking the carmaker private.

The SEC issued the subpoena Nov. 16, seeking information about Tesla’s governance processes and compliance with a settlement reached with the agency in September 2018, the company said in a regulatory filing. Tesla had agreed to put in place controls to oversee Musk’s communications -- including his tweets -- after the SEC alleged the chief executive officer committed securities fraud by saying he had secured funding for the company to go private.

Musk and the SEC have been at loggerheads ever since. The agency sought to have a judge find the billionaire in contempt of the settlement early the following year when he tweeted about Tesla’s production outlook without getting prior approval. The two sides agreed in April 2019 to amend their agreement by adding specific topics Musk can’t tweet about, or otherwise communicate in writing, without running it by a company lawyer.

Read more: Musk Keeps Poking the Bear Who Wanted to Ban Him From Tesla

Ten days before the SEC issued its November subpoena, Musk took an over-the-weekend Twitter poll asking whether he should sell 10% of his Tesla stake. The carmaker’s shares plunged 16% the following two trading days.

Tesla didn’t elaborate in its filing Monday about what prompted the SEC’s subpoena. Press officials for the agency declined to comment.

Musk’s lawyers said in a court filing last week that his August 2018 tweet declaring that he was considering taking Tesla private was “entirely truthful.” Shareholders claim in a class-action suit pending in federal court in San Francisco that Musk’s tweets cost them billions of dollars in losses. They’re seeking a judge’s ruling ahead of a trial set for May 31 that Musk’s tweets were false statements.

Tesla’s shares rose 1.4% at 9:39 a.m. Monday in New York.

(Updates with share trading in the final paragraph.)

--With assistance from Ben Bain.

To contact the reporter on this story:
Craig Trudell in London at ctrudell1@bloomberg.net

To contact the editors responsible for this story:
Brian Bremner at bbremner@bloomberg.net

Richard Clough, Kevin Miller

© 2022 Bloomberg L.P. All rights reserved. Used with permission.