Is this legal saga finally over?
Tesla CEO Elon Musk purposely thumbed his nose at the US Securities and Exchange Commission (SEC) a few weeks ago by making some announcements on Twitter in alleged violation of a previous agreement. Musk claimed first amendment rights. The SEC disagreed and went (back) to court.
According to Reuters, however, the two sides have come to a settlement regarding his Twitter use. If the deal is approved by the presiding judge, then Musk will no longer face the risk of being held in contempt for violating a previous settlement with the SEC that requires him to submit statements "material" to investors for review prior to publishing. Basically, a babysitter had to approve all of his tweets in advance. The new agreement the two sides hashed out specifically states what kinds of statements need to be vetted prior to posting on Twitter.
They include statements regarding Tesla's financial condition, proposed or potential deals (remember that whole Saudi thing about taking Tesla private again), production figures, performance projections, financing or lending arrangements, and even Musk's own transactions in the company's securities. Tesla's board of directors will also be given the right to seek approval regarding additional topics if they believe doing so is in the best interest of shareholders.
Basically, the deal clarifies details of the previous one Musk allegedly violated and also puts even more restraints on his use of Twitter. "Any attempt by Musk to circumvent the process will be much more easily policed," said Mike Diamond, a professor of securities law at Santa Clara University. "It could really have turned out far worse for him," he added. "The consequences of thumbing his nose at the SEC could have been far worse for him and the company."
Tesla's board of directors, as the agreement states, will now have the right to seek preapproval about additional Twitter topics if they think doing so is in the shareholders' best interests. Musk has made his dislike of the SEC very well known throughout the whole ordeal, once calling it the "Shortseller Enrichment Commission."
Last February, he tweeted "Something is broken with SEC oversight" to his more than 25 million followers. Clearly, the SEC doesn't like being mocked like that and now Musk is paying the price for doing so.