Elon Musk: Tesla boss’s contempt of court defence ‘borders on ridiculous’ says US regulator

Tesla chief executive Elon Musk’s defence against a contempt of court claim “borders on the ridiculous”, according to US regulators.

The Securities and Exchange Commission said on Monday that Mr Musk had brazenly ignored a federal judge’s order to ensure his tweets were approved by Tesla’s lawyers. Not a single tweet from Mr Musk has had legal signoff, the SEC said in a court claim.

Mr Musk, who has previously sent the value of Tesla’s shares soaring after tweeting inaccurate information, has argued he believes the order only covers information that is material to investors.

The regulator countered that Mr Musk’s claim that tweeting about car production forecasts on 19 February wasn’t material information is almost ridiculous. “His interpretation is inconsistent with the plain terms of this court’s order and renders its pre-approval requirement meaningless,” the lawyers wrote.

Monday’s filing from the SEC said the tweet was different from prior public disclosures by the company and that Mr Musk has regularly published tweets with “substantive information” about the company and its business.

A Manhattan district judge will decide if Mr Musk is in contempt and whether he should be punished. The SEC said no hearing is necessary on the matter “because there appear to be no disputed issues of material fact”.

Mr Musk’s lawyers said last week that the tweet merely restated previously approved disclosures about Tesla’s electric car production volumes. The tweet did not reveal material information or change the mix of data available to investors, the lawyers said.

The Tesla boss’s latest legal troubles stem from tweets he made in August claiming to have secured funding to take the company private at $420 a share. Shares jumped in value before falling again when it became clear that Mr Musk did not have the money in place.

To settle a securities fraud case brought by the SEC, Tesla and Mr Musk each had to pay $20m in fines. Mr Musk was also removed as chairman.

Last week, Mr Musk’s lawyers accused the SEC of censorship and violating the right to free speech under the First Amendment.

But the SEC said that submitting statements for approval does not amount to prohibiting free speech.

“As long as a statement submitted for pre-approval is not false or misleading, Tesla would presumably approve its publication without prior restraint on Musk,” they wrote.

Musk’s tweet said that Tesla would produce around 500,000 vehicles this year, but it wasn’t approved by the company’s “disclosure counsel”, the SEC has said.

The lawyer quickly realised it and summoned Mr Musk to the company’s Fremont, California, factory to help write a correction. The company would make vehicles at a rate of 500,000 per year, but it wouldn’t produce half a million in 2019.