SEC responds to Elon Musk harassment allegations

The agency said Friday it sought to address Musk’s concerns.

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Igor Bonifacic
February 19, 2022 12:42 PM
Tesla CEO Elon Musk departs after taking the stand to defend Tesla Inc's 2016 deal for SolarCity in a case before the Delaware Court of Chancery in Wilmington, Delaware, U.S. July 12, 2021. REUTERS/Jonathan Ernst
Jonathan Ernst / reuters

The US Securities and Exchange Commission has responded to Elon Musk’s harassment allegations. In a letter it filed on Friday with a New York federal judge, the SEC said its frequent check-ins with Tesla were consistent with expectations from the court overseeing the company’s 2018 settlement.

At the time, Tesla had agreed its lawyers would preclear some of Musk’s tweets after one of his messages drew the attention of the SEC. The specific tweet saw Musk say that he had “funding secured” to take Tesla private at $420 a share. Following an investigation, the SEC alleged the message constituted fraud, with Tesla and Musk eventually agreeing to settle the case for $40 million.

But within less than a year later, the SEC suspected Musk of not complying with his part of the agreement, according to The Wall Street Journal. In 2019 and 2020, the agency’s lawyers wrote to Tesla to ask why some of Musk’s tweets about the company’s production numbers and stock price weren’t cleared by its lawyers. Tesla claimed those statements weren’t covered by the settlement policy.

Tesla accused the SEC this week of using its resources to conduct “endless, unfounded investigations” into the company and its CEO. It also alleges the regulator broke its promise to distribute the $40 million settlement to Tesla shareholders, a claim the SEC disputes. In the letter it filed on Friday, the agency said it was working on a plan to pay shareholders and would have more details to share by March. As for the “endless” investigations, the agency said it has “sought to meet and confer with counsel for Tesla and Mr. Musk to address any concerns regarding Tesla and Mr. Musk’s compliance.”

It’s unclear what happens next now that the SEC has responded to Tesla’s allegations. The Journal reports US District Judge Alison Nathan has asked the two sides to work through their dispute rather than push for the court to intervene in the matter.

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