February 28, 2019 at 15:30

SEC accused Ilon Mask of violating the ban on the publication of important data on Tesla in social networks



    In August 2018, Musk wrote on Twitter about the possible withdrawal of Tesla from the exchange (we examined the possible implementation of this plan). According to the American Securities and Exchange Commission (SEC), the businessman’s statement was false and misled investors. Office filed a lawsuit against Mask.

    As a result, the entrepreneur and the SEC entered into a pre-trial agreement. Now the Commission is accusing Mask of violating it.

    What is the problem


    In order to prevent litigation, Musk and the SEC entered into a pre-trial agreement. Among his important points: Mask's resignation from the post of chairman of the board of directors of Tesla and his payment of a $ 40 million fine. Tesla also introduced independent top managers to the board of directors and was supposed to establish “additional control measures” over Musk’s messages on social networks.

    At the same time, in mid-February, the businessman wrote on Twitter that Tesla plans to produce “about 500 thousand” cars in 2019.


    He later clarified that he was talking about possible results at the end of the year, while the plans still included a figure of 400 thousand cars.

    The SEC considered these statements to be a violation of the terms of the pre-trial agreement, since such forecasts can directly affect the price of Tesla shares. Representatives of the department have already appealed to the court with a demand to issue an official ban on such comments for Mask.

    The entrepreneur himself stated to this that the figures announced by him were previously published in the quarterly profit report. In addition, he previously stated that no one checks his tweets:

    I had no problems with censorship after the court decision. No one reads messages before publication, the only thing that needs to be checked is tweets, which can affect the value of shares.

    [...]

    Even if a tweet can affect stocks and no one reads it in advance, I have the right to make a few mistakes. Nobody is perfect.

    How the relationship between Mask and SEC affects Tesla shares


    Elon Musk and the Securities and Exchange Commission have entered into a public confrontation several times in recent months.

    The agency came to the protection of investors, many of whom were concerned about Mask's plans to withdraw Tesla from the exchange and again become a private company. The pre-trial agreement concluded by the businessman and the SEC suggested that from now on, Mask's public statements about things and events that could affect the value of the company's shares would be preliminarily approved. This reassured investors, and Tesla's stock price stabilized.

    However, the recent exacerbation of the relationship between Mask and SEC provoked a decline in stock prices as investors are now again worried about the future of the company.

    According to analysts, despite the fact that the capitalization of Tesla ($ 51 billion) is already higher than that of Ford ($ 34 billion) and is approaching General Motors ($ 56 billion), the largest US automaker, the company is in a difficult situation. Tesla shares in 2019 fell by 10%, and over the past 12 months, the decline was 15%.

    In such circumstances, investors would prefer that Musk and his team focus on solving the company's problems, rather than being distracted by confrontation with government agencies. However, Elon Musk has a different opinion:

    Some people use their hair to express themselves. I use Twitter. Sometimes - to take revenge on critics. Twitter is a theater of war, if someone got there, then it immediately looks something like this: “OK, you're in the arena. Go!".


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