Tesla CEO Elon Musk has until March 11 to explain why he should not be held in contempt for violating a settlement agreement with the U.S. Securities and Exchange Commission.
The SEC argued that a tweet sent by Musk on February 19 violated their agreement. Musk is supposed to get approval from Tesla’s board before communicating potentially material information to investors.
The tweet said Tesla would produce “around” 500,000 cars this year. He later sent another tweet that corrected himself. The second tweet said “meant to say annualized production rate at the end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
U.S. Judge Alison Nathan signed an order Tuesday that reads “Defendant Elon Musk shall submit to this Court by March 11, 2019, briefing to show cause, if any, why he should not be found in contempt of the Court’s Final Judgment,” according to the latest court filing.
Tesla declined to comment.
Musk took to Twitter on Monday following the SEC’s request to hold him in contempt, agreeing with a follower at one point and noting “Something is broken with SEC oversight.”
It appeared that Musk’s tussle with the SEC, which began with a now infamous “funding secured” tweet about taking the electric automaker private, had been resolved last October. The settlement with the SEC over securities fraud allegations, which Judge Nathan approved October 16, required Musk to resign as chairman of the Tesla board, to pay a $20 million fine and to set up disclosure controls and procedures relating to his tweets. Tesla also paid a separate $20 million fine.
The SEC alleged in its original complaint filed in September that Musk lied when he tweeted on August 7 that he had “funding secured” for a private takeover of the company at $420 per share. Federal securities regulators reportedly served Tesla with a subpoena just a week after the tweet. The SEC filed a complaint alleging securities fraud six weeks later.
The case is SEC v. Musk in the U.S. District Court, Southern District of New York.