SEC Counters Elon Musk’s Contempt-of-court defense

U.S. securities regulators countered Tesla CEO Elon Musk’s contempt-ofcourt defense Monday night, writing in court papers that he brazenly disregarded a federal judge’s order and that one of his arguments “borders on the ridiculous.”

Lawyers for the Securities and Exchange Commission, in a response to Musk, wrote that when the contempt motion was filed in February, Musk had not had a single tweet approved by a company lawyer, violating a requirement of a court-approved settlement order.

The October securities fraud settlement stemmed from tweets by Musk in August about having the money to take Tesla private at $420 per share. But Musk didn’t have the funding secured. Tesla and Musk each had to pay $20 million in fines and agree to governance changes that included Musk’s removal as chairman.

SEC lawyers led by Cheryl Crumpton wrote in a response to Musk’s defense that he interprets the settlement order as not requiring pre-approval unless Musk decides the tweets are meaningful to investors. The agency said Musk’s argument that tweeting about car production forecasts on

Feb. 19 wasn’t material information is nearly ridiculous. “His interpretation is inconsistent with the plain terms of this court’s order and renders its preapproval requirement meaningless,” the lawyers wrote.