Elon Musk has filed one other spherical of arguments in his month-long battle with the Securities and Exchange Commission, which stems from a February 19 tweet about Tesla’s manufacturing objectives.
As a part of a September settlement, Musk promised to get sign-off from Tesla legal professionals for any tweets that “contain, or reasonably could contain” materials data—authorized jargon for data important to individuals buying and selling Tesla’s inventory. The SEC argues that Musk’s February tweet, stating that Tesla would produce “around 500k” automobiles in 2019, violated that requirement.
Musk disagrees. He argues that he was merely repeating Tesla’s earlier manufacturing estimates. And he insists he was entitled to make use of his personal judgment to find out the data was not materials—and subsequently did not require pre-approval by Tesla’s legal professionals.
Tesla is “best positioned to interpret its own policy”
Musk reiterated these claims in his newest submitting. The settlement required Musk to observe a set of Tesla-developed pointers, and Musk notes that Tesla’s legal professionals have said that he hasn’t damaged these pointers.
“Tesla—which is best positioned to interpret its own policy—has affirmed to the SEC that Musk complied with the policy,” Musk’s legal professionals wrote within the Friday submitting. “This is meaningful evidence that Musk has satisfied his obligations. The court can discharge its order to show cause on these grounds alone.”
It’s price noting right here that Tesla’s normal counsel, Dane Butswinkas, abruptly stop on February 20, 2019—sooner or later after Musk’s February 19 tweet and the identical day the SEC despatched Tesla a letter looking for extra details about the tweet. Butswinkas had solely been on the job for about two months. Under Tesla’s coverage, Butswinkas was one of many legal professionals who was imagined to assessment materials tweets from Musk earlier than they have been posted, however Musk by no means submitted any tweets for his approval.
On March 11, an exterior Tesla lawyer from the legislation agency of WilmerHale despatched the SEC a letter stating that—in Tesla’s view—Musk’s tweets weren’t materials and subsequently Musk has complied with Tesla’s tweet approval coverage.
“Musk has not tweeted material information”
In its most up-to-date submitting, the SEC faulted Musk for failing to get any of his tweets pre-approved since that coverage took impact in December. These included tweets about “vehicle tax credits and pricing,” “plans for expansion of charging stations internationally,” “construction and production plans for a new Shanghai factory,” and “whether Tesla plans to phase out its Model S and Model X vehicles in the future.” The SEC views all of those subjects as materials to Tesla shareholders.
Again, Musk disagrees.
“The SEC shows, through its selection of ten tweets, that no matter how innocuous, how well known, or how removed from the subjects mentioned in the Policy, because the tweet concerns Tesla, the SEC believes Musk must have them pre-approved,” Musk writes. “These tweets, which include statements denying untrue rumors and repeating well-known safety information, prove Musk’s point. Since the Order was entered, Musk has not tweeted material information regarding Tesla.”
Musk argues that the SEC’s broader interpretation is “inconsistent with the plain language” of Musk’s settlement settlement with the SEC. He consists of red-line drafts Musk’s legal professionals despatched to the SEC throughout negotiations over the settlement. According to Musk, the SEC initially sought to have all Tesla-related tweets pre-approved, however Musk insisted that solely tweets that have been materials—or more likely to be so—needs to be topic to pre-approval. In Musk’s view, the SEC is making an attempt to re-write the settlement and drive Musk to get all Tesla-related tweets pre-approved.