US Regulators Want Elon Musk's Tweets Monitored, Threatens to File a Subpoena

Sophie Webster, Tech Times 22 March 2022, 08:03 pm

On Mar. 22, the securities regulators of the United States said that they have the authority to subpoena Tesla's CEO and billionaire Elon Musk about his tweets.

The regulators urged a federal judge not to let Musk get away with tweeting with abandon.

Elon Musk Warned by US Regulators

In 2019, the US Securities and Exchange Commission or SEC required Musk to get pre-approval for certain Tesla-related public communications like tweets that could affect the company's stock price ad shareholder value, unjustified action, and harassment.

Musk has called the actions of SEC on Twitter but eventually agreed to settle with the regulators. However, in 2021, Musk came under fire again after he asked his Twitter followers if he should sell 10% of his stake in Tesla, resulting in the company's shares decreasing sharply, according to TechCrunch.

Also Read: Elon Musk vs. SEC: Alleged 'Harassment Campaign' by the Federal Agency-Gets Complaint from CEO

The Tesla CEO has since sold around $16 billion worth of sticks. In November 2021, the SEC issued a subpoena to determine if Musk was complying with its previous settlement.

In response to the probes of the regulators, Musk has tried to terminate the 2018 consent decree, as well as quash a subpoena requesting records concerning the Twitter poll last year.

SEC regulator Melissa Armstrong said that in 2018, to settle the regulator's action against Musk, the Tesla CEO agreed to comply with Tesla's mandatory procedures requiring pre-approval of certain of his public communications that are related to Tesla.

Armstrong added that Musk could not cast off the Amended Final Judgement just because he has found complying with the company's procedures to be less convenient than he had hoped, or because he wishes the SEC would not investigate whether Tesla's disclosure controls and procedures are being followed and maintained.

The dispute with the SEC began from a tweet from Musk back in 2018 stating that he had funding secured to take Tesla private, but in reality, the buyout was not close and subject to several contingencies, according to the SEC.

US regulators said that Tesla's claims constituted fraud because they were misleading, and Musk had not discussed deal terms or price with any potential financing partners, and his tweets caused the automaker's stock price to increase by over 6%, leading to significant market disruption.

Musk and SEC Settlement

Tesla and Musk each paid a $20 million civil fine in the settlement, and Musk stepped down as Tesla's chairperson as a result, according to Reuters.

Musk has since accused the regulator of punishing him for criticizing the government and exercising his constitutional right to free speed under the First Amendment, complaining about the number of demands by the SEC from 2018 to 2022, according to USNews.

Armstrong wrote in the court filing that Musk's own chronology of alleged demands is underwhelming, and it reflects legitimate inquiries as to new potentially violative conduct by Tesla and Musk, including the conduct that gave rise to the regulator's 2018 enforcement actions.

The regulator then said that modifying the 2018 final judgment would not free Musk from scrutiny over his tweets linked to Tesla because as an officer of the company, he would still be subject to the automaker's disclosure control and procedures.

Armstrong added that so long as Musk and Tesla use Musk's Twitter account to disclose information to investors, the SEC may investigate matters linked to the automaker's disclosure controls and procedures, including Musk's tweets about Tesla.

In February 2021, Elon Musk was investigated by SEC after promoting Dogecoin on Twitter.

Earlier this year, Elon Musk praised SEC's short position disclosure, but the lawsuit continues.