Tesla’s Musk calls SEC ‘broken’ in the new Twitter feud

(Reuters) – Silicon Valley billionaire Elon Musk laid in the U. S. Securities and Exchange Commission again on Tuesday after he accused the Tesla, Inc. Chief Executive Officer of the violation of a fraud settlement agreement in a tweet last week.

A Tesla logo is shown on a ground-breaking ceremony of Tesla Shanghai Gigafactory in Shanghai, China, January 7, 2019. REUTERS/Aly Song/Files

In a filing on Monday, the SEC said in a tweet on Feb. 19 Musk had broken a promise last year to his public statements, approved by the board of directors, a part of the deal.

The regulator does not say what the remedy is wanted the court to impose, but the bet was part of a settlement that the head requirements of the SEC, for Musk resignation as Tesla CEO, seen by investors in the company is a big risk for the future.

Musk, who in the first instance, on Monday, the SEC accused of failing to read the company’s annual reports, followed by a tweet in the early hours of Tuesday.

“Something is broken with SEC oversight,” he wrote.

Shares of the electric car manufacturer baptised 3 percent to $289.90 in the trade for the bell, signalling concern among investors that Musk had reopened his feud with the regulator.

“There is disappointment that Elon Musk does not seem to be able to do things in a way that supports the share price,” said Rick Meckler, a partner in Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

J. P. Morgan Securities analyst Ryan Brinkman said in a worst-case scenario, the SEC could again find Musk’s removal as CEO for the violation of the terms of the agreement and the shares could fall by a fifth or more than $50, value.

“It is difficult to evaluate the likelihood of the return of this worst-case scenario … but on the other hand, the current accusations seem to be much less serious (than last year), Brinkman told clients in a note.

“If the SEC were to find Mr. Musk’s removal (perhaps subject to another settlement), we believe that the shares could approach the mid-$200 levels.”

Thirteen of the 32 Wall Street brokers now rate of the electric car company with a “buy” or higher. Eight it as a “hold” and 11 “sell” or lower, with a median of PT $327.50

Tesla ‘ s general counsel Dane Butswinkas, hired as an external consultant to help arrange the event at the SEC, resigned a day after Musk made the tweet in which the new SEC case refers.

The tweet read: “Tesla 0 cars in 2011, but will be around the 500k in 2019”, a false claim that the SEC said had not been pre-approved by the board of directors and was distributed in more than 24 million people.

Musk corrected his tweet four hours later to say that the “annual production” at the end of the year 2019 would probably be about 500,000, with deliveries expected to be about 400,000.

“Although this tweet (after trading hours), and the quick fix seems innocent enough, the SEC is not likely to cut Musk clearance,” said another analyst Gene Munster of Loup Ventures.

“Musk unwillingness to follow the rules is a part of what you must be prepared to accept as an investor in Tesla.”

Reporting by Vibhuti Sharma and Medha Singh in Bengaluru; Editing by Patrick Graham and Bernard Orr

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