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Tesla Elon Musk squares with the SEC in court on contempt hearing



(Reuters) – Lawyers for Tesla Inc. Chief Executive Officer Elon Musk will argue on Thursday that he does not violate anti-fraud with the US Securities and Exchange Commission and should not be disdained, the latest twist in a high-profile battle between billionaire and government.

Mr. Musk's struggle with the SEC, which plays out in a federal court in Manhattan, has raised investor concerns that it can lead to limitations on his business or even his removal from Tesla, while distracting him in a leading point in the expansion of the electric car manufacturer.

Tesla, which built its reputation on luxury cars, has faced several production challenges with its model 3-seater, which it expects to reach the mass market and recently offers a version starting at $ 35,000.

SEC on Feb. 25 accused Mr Musk of violating his ruling in October 201

8 by posting essential information about Tesla on Twitter six days earlier, without first seeking legal approval.

Mr. Musk has objected that the information was not essential, and did not need to be seen. It is unclear whether Mr Musk will appear at the hearing.

The fight is about a tweet that Mr Musk sent to his more than 24 million Twitter followers: "Tesla made 0 cars in 2011, but will make around 500k in 2019, which means 500,000 vehicles.

Four hours later Mr Musk corrected himself and said that annual production would be "probably around" 500,000 at year-end, with full-year deliveries totaling about 400,000.

The SEC previously called the tweet "apparently different" from Tesla's Jan-30 outlook when targeted annual model 3 production over 500,000 as soon as the fourth quarter and forecasted 360,000 to 400,000 vehicle manufactures this year.

Musk's lawyers prevented the previous tweet from simply reformulating a forecast he had given on January 30 when he said that model 3 production could contain 350,000 to 500,000 vehicles.

They also said that the SEC had admitted during settlement negotiations that Mr Musk did not need to pre-approve like f or all tweets about its Palo Alto, California-based company.

On Wednesday evening, Tesla repeated its forecast for delivery forecasts on January 30, but deliveries from the first quarter had fallen 31% from the previous three months to around 63,000. The share price fell more than 10% at the beginning of Thursday.

It is rare for the SEC to seek a contempt, even though some legal experts said the governor has a strong fall over Mr. Musk's previous tweet.

"It seems quite clear that this particular tweet did not happen through the scrubbing system that Tesla would have in place," says Stephen Diamond, who teaches securities law at Santa Clara University School of Law.

Musk says SEC [19659002]

A contempt of US district director Alison Nathan was able to subject Mr Musk to new sanctions as a higher fine or removal from Tesla's board or as chief lawyer, legal experts said.

James Cox, a Duke University Law professor, said Judge Nathan was unlikely to impose a serious punishment such as giving control of Tesla.

"We must understand that Tesla is a very important point in its history, and I do not think any judge wants to be v proved subsequently as the cause to Tesla's death, "he said.

" She could give him a good tongue and tell him that this is it, and next time mmer she did not get so kind "

The decision resolved a SEC trial that accused Mr Musk of violating securities laws by tweeting on August 7 that he had" funding secured "to take Tesla privately to $ 420 per share.

The tweet sent Tesla share price up to 13.3%. Mr Musk's privatization plan was, at best, at an early stage and funding was not in place.

Upon termination, Musk agreed to go down as Tesla's chairman, and the company said it would adopt procedures to monitor all of Mr Musk's communications, regardless of format, and approve written communications that may be material to the company.

Tesla and Mr. Musk has also agreed to pay a fine of $ 20 million.

The legal battle, which began in September, has not stopped Mr. Musk from being a pronounced critic of the SEC.

He then noticed the SEC the "Shortseller or Enrichment Commission", reminiscent of his attacks against hedge funds and other investors selling Tesla's stock cards, hoping it will fall.

In a December interview with CBS "60 minutes," Mr Musk said he didn't respect the SEC. He also said that his tweets had not been reviewed in advance since the conciliation.

And early in the morning of February 26, after the SEC left its relegation movement, Musk tweeded: "Something's broken with SEC surveillance."


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