Tesla CEO Elon Musk and the Security and Exchange Commission have reached an agreement about the CEO’s Twitter use. In a document, Elon Musk’s legal team and the SEC issued a motion requesting the court to amend the terms of the CEO’s settlement, particularly the sections pertaining to information that are considered material, and thus, requiring approval.
The motion comes after Elon Musk’s legal team and the SEC asked the court for an extension to settle the contempt charges filed by the agency against the CEO. The agency took issue with Musk’s tweet back in February 19, when he mentioned on Twitter that Tesla will produce around 500,000 cars this year, echoing an estimate he shared during the Q4 2018 earnings call. The SEC asked the court to hold Musk in contempt for violating his settlement with the agency, which required pre-approval of tweets that contain material information.
The two sides faced off on April 4, with the SEC reiterating its accusations before presiding Judge Alison Nathan. After hearing the arguments from the agency and Musk’s legal team, Judge Nathan ordered the two parties to arrange a meeting and send a letter to the court within two weeks. The judge also told the SEC and Musk’s team to come up with an agreement. “My call to action is for everyone to take a deep breath, put your reasonableness pants on and work this out,” she said.
Based on the motion filed by the parties today, it appears that Elon Musk will not be paying a fine for his February 19 tweet, though the document outlined a series of topics that are deemed material. Following is the section of the joint filing outlining topics that require review and pre-approval.
- potential or proposed mergers, acquisitions, dispositions, tender offers, or joint ventures;
- production numbers or sales or delivery numbers (whether actual, forecasted, or projected) that have not been previously published via pre-approved written communications issued by the Company (“Official Company Guidance”) or deviate from previously published Official Company Guidance;
- new or proposed business lines that are unrelated to then-existing business lines (presently includes vehicles, transportation, and sustainable energy products);
- projection, forecast, or estimate numbers regarding the Company’s business that have not been previously published in Official Company Guidance or deviate from previously published Official Company Guidance;
- events regarding the Company’s securities (including Musk’s acquisition or disposition of the Company’s securities), credit facilities, or financing or lending arrangements;
- nonpublic legal or regulatory findings or decisions;
- any event requiring the filing of a Form 8-K by the Company with the Securities and Exchange Commission, including:
- a change in control; or
- a change in the Company’s directors; any principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer, or any person performing similar functions, or any named executive officer; or
- such other topics as the Company or the majority of the independent members of its Board of Directors may request, if it or they believe pre-approval of communications regarding such additional topicswould protect the interests of the Company’s shareholders; and Jugement decided… the proposed amendment to the Final Judgment is fair, reasonable, and in the interest of the parties and investors because the proposed revisions will provide additional clarity regarding the written communications for which the Defendant is required to obtain pre-approval pursuant to the Final Judgment
Below is the joint motion outlining the agreement between Elon Musk’s legal team and the Securities and Exchange Commission.