The sage between Elon Musk and the SEC over his Tesla tweets might finally be coming to an end as the two parties have reached a deal to avoid holding Musk in contempt, but it will include a new oversight over his public comments.
Last month, the SEC asked a judge to hold Musk in contempt for violating one of the terms of the settlement of the SEC’s complaint against Musk over his “funding secured” comment about his attempt to take Tesla private.
The SEC settlement requires that Musk get pre-approval for tweets that “reasonably could contain material information” and which could move the stock — which they claim he didn’t for a tweet sent in February.
The government agency argues that Musk should have sought approval from Tesla before sending a tweet referencing the automaker’s production guidance for 2019.
Musk’s lawyers sent a letter to the judge claiming that the tweet wasn’t material and he didn’t need to receive approval under the new policy of the settlement.
The SEC argued against this interpretation in a lengthy document filed with the court.
Two weeks ago, they had a hearing before Judge Nathan who said that the government lawyers should make more of an effort to resolve the issue without going to court to hold Musk in contempt.
Over the last few weeks, the two parties have been negotiating and they have now filed a new agreement to clarify oversight that Tesla needs to have over Musk’s tweets.
If the deal is made official by the judge, Musk will have to seek legal review from Tesla when tweeting about the following things:
- 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;
- nonpublic 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; or
- 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;
Here’s the deal submitted to the court in full:
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