Tesla slides after the SEC says Elon Musk violated his settlement with the agency
- Tesla CEO Elon Musk violated the terms of his agreement with the Securities and Exchange Commission, the agency said in a court filing Monday.
- In a tweet last week, Musk said Tesla would produce 500,000 vehicles this year. He later corrected himself and said it would make only about 400,000.
- Tesla weathered a rocky few months in the wake of Musk's tweets in August that he had "funding secured" for a deal to take Tesla private at $420 a share.
- Musk was sued by the SEC for fraud last year. As part of his settlement with the SEC, Tesla is supposed to preapprove all of his communications with shareholders that include "material" information about the company.
- Watch Tesla trade live.
Tesla fell 3.14% to $289.40 a share early Tuesday after the Securities and Exchange Commission said CEO Elon Musk violated the terms of his agreement with the agency.
In a court filing Monday, the SEC said that Musk had once again misled his investors on Twitter. Last week, Musk tweeted that Tesla would produce 500,000 cars in 2019 before backtracking and saying it would actually make 400,000 sedans. In correspondence with the SEC, Tesla acknowledged that Musk hadn't gotten preapproval of his first production-related tweet last week, but said that wasn't a problem.
"Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people," the SEC said in a filing with the US District Court for the Southern District of New York. "Musk has thus violated the court's final judgment by engaging in the very conduct that the pre-approval provision of the final judgment was designed to prevent."
Under the settlement, Tesla is supposed to preapprove all of his communications with shareholders that include "material" information about the company, SEC said.
The innovative auto company weathered a rocky few months in the wake of Musk's tweets in August which said he had "funding secured" for a deal to take Tesla private at $420 a share.
He didn't secure funding, and was sued by the SEC for fraud. In September, Musk and Tesla settled with the agency, agreeing to pay a fine of $20 million each and for Musk to step down as the company's chairman for at least three years. He was replaced by Robyn Denholm, previous CFO at Australian telecom operator Telstra.
Tesla was down 10.2% this year.
