Tesla’s overall shares went down by 5 percent after judges were asked by the SEC to hold CEO Elon Musk for Breaching Agreement. The United States’ Security and Exchange Commission pointed out a tweet made by the CEO last February 19, 2019. The SEC deemed the tweet as incorrect regarding the company’s production.
The Actual Tweet and Its Implication
Musk said that his company would make about 500,000 vehicles for this year. Hours later, he cleared up his statement, saying that what he really meant is the production rate of the company at the end of this year. That amount is around 500,000 vehicles or at least a production rate of 10,000 vehicles per week. Musk also added that 400,000 is estimated to be delivered within this year.
The SEC noted that Musk did not look for or obtained pre-approval before posting this tweet. It was also added that this tweet is incorrect and publicized to millions of people on twitter.
CEO Elon Musk answers the SEC decisions hours later, saying that the regulator forgot to read the company’s earnings transcript. The transcript precisely indicates 350,000 to 500,000, Musk added. He also added in another tweet moments later that he has great respect for the judges. And is happy with how the US judicial system works.
Further Actions of Both Parties
Last year, the SEC settled complaints with the CEO and the company Tesla over Musk’s cancellation of a bid to take the company private. Musk still remains in charge of the company but gave up his title of being the Chairman. This bold move by the CEO got him fined for $20 million. Musk needs to get a pre-approval first before making future tweets, as the settlement dictates.
Tesla did not immediately reply to the request for a comment, and after two days, The company answered the regulators’ questions. SEC concludes that for all the reasons given, the agency politely requests that the Court enter a procedure to show the reason why Musk should not be held in contempt. This was as per last year’s October 4 Final Judgment.
Tesla did not comment on the filing as of this moment.