forward, the SEC could demand additional constraints on Mr. Musk’s activities, Mr. Crimmins added, since the primary concern of the SEC’s case was about how he had acted as a CEO and how he would behave going forward.
Harvey Pitt, a former SEC chairman, said Mr. Musk’s latest tweet doesn’t raise securitieslaw issues, but he questioned the wisdom of sending it. The tweet “is juvenile, narcissistic, stupid, erroneous and petulant,” said Mr. Pitt, the CEO of Kalorama Partners. “But nothing in the securities laws says Mr. Musk has to like the SEC or say nice things about it.”
Tesla’s shares fell more than 2 % in after-hours trading Thursday, after declining more than 4 % on the day.
Tesla shareholder Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, sent out an urgent plea on Twitter to Mr. Musk’s account: “@elonmusk WTF please stop tweeting. Feel free to call me to vent. We want to see Tesla succeed. You’re just helping the enemy. I don’t get it.”
Before Thursday it had appeared that Tesla and Mr. Musk were moving past the regulatory challenges, putting the spotlight back on the business of building electric cars. On Tuesday, Tesla announced production results for the third quarter that showed the company is making improvements toward being able to sustain assembly of its Model 3 sedan.
But while the situation at the auto maker’s Fremont, Calif., factory seemed to be improving, Mr. Musk has plunged Tesla into constant drama, mainly through his use of Twitter.
In April, he joked about the company going bankrupt amid concerns about Tesla’s finances, leading to its stock dropping and Mr. Musk having to explain it was just a joke. In July, he suggested that a British cave explorer involved in the rescue of a boys’ soccer team in Thailand was a pedophile – a claim he later apologized for, then doubled down on, and now faces a defamation lawsuit over.
On Monday, Mr. Musk signaled he wasn’t backing away from Twitter. He posted a cryptic message at 1:22 a.m. local California time, shortly after closing the third quarter, that included a music video of hip-hop song “O.P.P.” with a caption stating the artist’s name, “Naughty by Nature,” along with a winking emoji.
But his most disruptive tweet occurred Aug. 7, when he announced during the trading day an idea to take Tesla private, saying funding was secured at $420 a share. Seventeen days later, Mr. Musk announced he had second thoughts, killing the idea, in part, he said, because it was proving a distraction as Tesla was working to bring out the Model 3. Behind the scenes, Mr. Musk and the Tesla board had rushed to put into place the teams required to consider such a deal.
The SEC alleged in its lawsuit that Mr. Musk never discussed going private at $420 a share with any potential funding source, among other complaints. Mr. Musk called the lawsuit “unjustified.”
On Sept. 27, lawyers for Mr. Musk rejected a proposed settlement with the SEC and it appeared the CEO was preparing for a lengthy fight. The SEC then filed its lawsuit, which sought to ban Mr. Musk from serving as a director or officer at any publicly traded company.
A person familiar with Mr. Musk’s thinking said he thought the SEC’s case was flawed and could be beat in court.
He relented, however, and agreed to a surprise settlement. A key part of the deal sought to put into place a better way for the company to control his communications. Mr. Musk, with more than 22 million Twitter followers, tends to speak his mind at all hours, and his usage of tweets outpaces that of most other tech executives.
Once the SEC order is in place, Mr. Musk could be charged with violating securities law and breach of a court injunction that was part of the agreement if he is found to have knowingly made new false statements after the settlement.
On Thursday, Elon Musk sent a tweet that appeared to disparage the U.S. Securities and Exchange Commission just days after settling fraud charges with the agency.