Two SEC officials objected to how Musk tweets reviewed

Two SEC officials objected to how Musk tweets reviewed

Two Republican officials of the Securities and Exchange Commission objected to part of the security regulator’s settlement with Tesla last year that required it to appoint a lawyer to review Elon Musk’s tweets.

SEC commissioners Hester Peirce and Elad Roisman disagreed with the requirement that the electric carmaker find an “experienced” lawyer to review tweets by senior executives and to advise the company on how to obey federal securities laws.

The settlement last year came after the SEC sued Mr Musk over a tweet in which he claimed he had “funding secured” for a buyout of the company. He did not, according to the SEC, which fined Mr Musk and Tesla a total of $40m.

On Monday, Mr Musk is due to file arguments in court in New York after the SEC accused him of breaking the settlement, which required Tesla’s in-house lawyer to pre-approve any tweets containing information that could be material to Tesla shareholders.

The SEC last month asked a judge to hold Mr Musk in civil contempt of court after it said he had tweeted about Tesla’s vehicle production estimates without first checking the tweet with the in-house securities lawyer as required under the settlement. He had to subsequently correct the tweet.

His first tweet had been “evidently inaccurate”, according to the SEC’s motion, which said that Tesla’s designated Twitter reviewer had later seen the initial tweet “along with the general public” and then “immediately arranged to meet with Musk and draft the correction that Musk tweeted out over four hours later.”

Mr Musk, according to a Tesla letter included in the SEC’s motion, said he was drawing on information released in corporate filings and therefore believed it had already been pre-approved. “Mr Musk believed that the substance had already been appropriately vetted, pre-approved, and publicly disseminated,” said an attorney for Tesla in the letter.

On Twitter, Mr Musk has attacked the civil contempt motion as a sign that “something is broken with SEC oversight”.

All five SEC commissioners broadly backed last year’s settlements with Mr Musk and Tesla, which required Mr Musk to give up the chairmanship of the company, forced Tesla to draw up rules about his communications, and imposed a $20m fine on the entrepreneur.

While Ms Peirce and Mr Roisman supported requiring Tesla to properly oversee Mr Musk’s tweets, they objected to telling the company to hire a lawyer to do so, according to records obtained under the Freedom of Information Act.

Ms Peirce, who has been critical of imposing corporate fines for executive wrongdoing, also objected to the $20m fine the SEC imposed on Tesla.

An adviser to Ms Peirce declined to comment. Mr Roisman did not return a request for comment.

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