Tesla’s CEO Elon Musk wants to scrap his settlement with the SEC over his 2018 “taking Tesla private tweet.” The US securities regulator meanwhile looks in no mood to relent.
For the uninitiated, in 2018, Musk tweeted that he is considering taking Tesla private at $420 per share and has also “secured funding.” That price is not comparable to the current price as the company has split its shares twice since then.
The funding wasn’t really secure and Musk said that he believed that Saudi Arabia would back the transaction. Eventually, in the same year, Saudi Arabia’s PIF (public investment fund) invested in Lucid Motors, an EV (electric vehicle) startup run by former Tesla employee Peter Rawlinson.
Meanwhile, after Musk’s controversial tweet, Musk paid a $20 million fine. Tesla too paid a fine of a similar quantum. Musk also agreed to step down as Tesla’s chairman but continued to stay as the CEO.
As part of the agreement, Musk was also supposed to be careful about tweeting price-sensitive information and his tweets had to be vetted by the company’s lawyers.
Recently, “Teflon” Musk won a class action lawsuit filed by some Tesla stockholders who alleged that they suffered losses due to his 2018 tweet.
Buoyed by the verdict in the class action lawsuit, Musk now wants to scrap the settlement with the SEC also.
Musk and SEC Spar Over Previous Settlement
While his public record has been otherwise, Musk has been rediscovering himself as a “free speech absolutist.” He now wants to scrap the SEC settlement where lawyers need to vet his tweets citing it as an infringement of his free speech.
Referring to the class action lawsuit, Musk’s attorneys argue that “in light of the jury’s finding that Mr. Musk’s tweets didn’t violate Rule 10b-5, the SEC lacks support both for the consent decree itself and for its arguments on appeal.”
They added, “The verdict provides further reason why the public interest in avoiding unconstitutional settlements easily subsumes the SEC’s purported stake in the consent decree.”
Meanwhile, the SEC is in no mood to relent. In its reply, it said, “Musk waived his opportunity to test the Commission’s allegations at trial when he voluntarily agreed (twice) to a consent judgment.”
SEC Wants a “Twitter Sitter”
It added that the verdict in the class action lawsuit “says nothing about the continuing public interest in a negotiated settlement term that does not preclude Musk from tweeting accurately about Tesla or other topics, but rather requires Tesla to review Musk’s Tesla-related communications before publication, including through Musk’s Twitter feed — a communication channel designated by Tesla for disclosure.”
The SEC still wants a “Twitter sitter” for Musk and the tussle between the two parties could only increase in the coming days.
Musk incidentally now owns Twitter also. His Twitter acquisition meanwhile worked to the nemesis of Tesla stockholders and the stock plunged after Musk took Twitter private.
Tesla stock fell to nearly $100 on the first trading day of 2023 but is now surpassed $200. Cathie Wood who bought the dip in Tesla stock sees it rising way above the current price levels.
Musk and Tesla Face More Legal Troubles
Musk and Tesla face multiple other legal troubles including those related to the company’s autonomous driving software. Yet another Tesla car crashed into a stationary emergency vehicle recently adding to the long list of such accidents.
The US NHTSA (National Highway Traffic Safety Administration) is investigating Tesla Autopilot over multiple crashes involving the software. The California DMV (Department of Motor Vehicle) also accused the Elon Musk-run company of using deceptive practices to market the FSD (full-self driving).
Last year, former US presidential candidate Ralph Nader called upon the NHTSA to issue a recall for Tesla’s FSD.
Automotive companies see autonomous driving as a long-term growth driver. NIO has partnered with Tencent for self-driving technology. last year, Baillie Gifford also increased his stake in NIO.
Musk too praised Chinese EV companies during the company’s Q4 2022 earnings call. Many analysts see NIO as a worthy competitor to Tesla. There is a guide on buying NIO stock.
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