Tesla CEO Elon Musk has reached a settlement with the Securities and Exchange Commission to keep his Twitter habit in check — and feels comfortable enough with the arrangement to refer to it in a teasing tweet.
Friday’s settlement was a serious matter: Musk could have faced sanctions for contempt of court if he failed to patch up the rift with the SEC over whether he was following the terms of an earlier settlement.
To refresh your memory, the SEC accused Musk of securities fraud last September for incorrectly claiming on Twitter that he had secured funding to buy up publicly traded shares of the Tesla electric-car company and take the company private.
Under the terms of the settlement of that fraud case, Musk and Tesla each paid a $20 million fine, Musk agreed to surrender his title as chairman, and he agreed to have tweets about Tesla reviewed in advance by a company overseer. (Some folks have referred to that person as Musk’s “Twitter sitter.”)
During the months that followed, Musk made statements suggesting that he had a loose interpretation of what fell under the Twitter sitter’s purview, and in February he sent out a controversial Tesla-centric tweet that the company’s lawyers acknowledged wasn’t cleared in advance.
Tesla made 0 cars in 2011, but will make around 500k in 2019
— Elon Musk (@elonmusk) February 20, 2019
That’s what set off the SEC’s contempt complaint.
U.S. District Judge Alison Nathan told Musk and the SEC to resolve their differences, and after a couple of extensions, the two parties finally filed the proposed agreement for Nathan’s review and likely approval. The consent motion gets specific about the topics that Musk will have to have the company overseer review before issuing written statements in venues ranging from Twitter to press releases and blog posts. (We’ve included the list at the end of this report.)
Musk didn’t make any direct comments about the agreement, or how he’ll change his tweeting ways, but he did touch on the tiff in a Twitter conversation about his Twitter habit. (So meta!)
Here’s how the exchange played out:
@elonmusk sometimes i think Neuralink is already implanted in you…
how can you keep up with all of your twitter mentions & pick which one is important or interesting to respond to!?— Evelyn Janeidy Arevalo (@JaneidyEve) April 27, 2019
Only see about 5% of mentions. No deep logic to those I answer. Aspirationally useful, but often whimsical.
— Elon Musk (@elonmusk) April 27, 2019
It’s just me writing, so the foolish things I say are entirely my fault ?
— Elon Musk (@elonmusk) April 27, 2019
Not many foolish things. Mostly cool, often funny, sometimes random ;)
— Alejandro (@gul_garak) April 27, 2019
Certain regulatory agencies would beg to differ ??
— Elon Musk (@elonmusk) April 27, 2019
And now for the legalese: Here are the not-so-random topics that are supposed to spark pre-approval of written statements by Musk’s company overseer:
- The Company’s financial condition, statements, or results, including earnings or guidance.
- Potential or proposed mergers, acquisitions, dispositions, tender offers, or joint ventures.
- Production numbers or sales or delivery numbers (whether actual, forecasted, or projected) that have not been previously published via pre-approved written communications issued by the Company (“Official Company Guidance”) or deviate from previously published Official Company Guidance.
- New or proposed business lines that are unrelated to then-existing business lines (presently includes vehicles, transportation, and sustainable energy products).
- Projection, forecast, or estimate numbers regarding the Company’s business that have not been previously published in Official Company Guidance or deviate from previously published Official Company Guidance.
- Events regarding the Company’s securities (including Musk’s acquisition or disposition of the Company’s securities), credit facilities, or financing or lending arrangements.
- Non-public legal or regulatory findings or decisions.
- Any event requiring the filing of a Form 8-K by the Company with the Securities and Exchange Commission, including a change in control; or a change in the Company’s directors; any principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer, or any person performing similar functions, or any named executive officer.
- Such other topics as the Company or the majority of the independent members of its Board of Directors may request, if it or they believe pre-approval of communications regarding such additional topics would protect the interests of the Company’s shareholders.
I guess this means that Musk will have to get pre-approval before he puts out any more tweets about his grand plan to sell electric-powered leaf blowers.
