Hold Musk in contempt, SEC urges

The U.S. Securities and Exchange Commission on Monday asked a judge to hold Elon Musk in contempt for violating last year’s settlement with the agency, raising more regulatory issues for Tesla Inc.’s chief executive.

The SEC said Musk violated the settlement with a Feb. 19 tweet in which he wrote that “Tesla made 0 cars in 2011, but will make around 500k in 2019.”

He corrected himself within hours to say he meant the company would be producing at an annualized rate of half a million vehicles by the end of this year.

The settlement with the agency required him to seek approval from the company for social media posts and other written communication that would be material to the company or investors. The SEC ordered the electric-car maker to employ or designate a securities lawyer to review Musk and other senior officers’ Twitter communications.

Tesla was supposed to have set up internal controls last year to keep Musk from posting material information about the company without approval.

“He once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with Internet access,” the SEC said in papers filed in federal court in Manhattan, N.Y.

The SEC’s move put Musk in legal peril once again.

‘They have to view the conduct as akin to another violation of securities laws to take this step,” said Brad Bennett, a former head of enforcement at the Financial Industry Regulatory Authority who previously worked as an SEC enforcement attorney.

“It’s a very novel situation where someone is running an enterprise with this kind of market cap and gives the SEC cause for concern that the person is not capable of following the securities laws.”

Calls to Tesla and emails to Musk and his representative weren’t immediately returned.