L'Opinion - - The Wall Street Jour­nal & I'Opi­nion - Tim Hig­gins and Ga­briel T. Ru­bin

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.

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