(Elon Musk is banned) Although not generally known, since 2018 the Securities and Exchange Commission of the United States (SEC) has vetoed Elon Musk from talking about 9 subjects on Twitter.
According to The Wall Street Journal, at the time it was agreed that a company lawyer would oversee Elon Musk’s tweets. The regulator argues that the company’s CEO discloses material information to shareholders.
Since then, the tycoon has experienced some restrictions on his statements. Note that, since 2019, Musk has somehow manipulated the market.
Financial conditions of the company
In 2018, the SEC accused Musk of fraud for financial statements on unfinished business involving Tesla. After this episode, the relationship between the executive and the regulator became harsh.
However, an agreement was reached in the same year. An experienced securities attorney was tasked with overseeing Musk’s comments.
Statements about the company’s financial condition, as well as its results, needed approval.
Potential mergers or proposals
Proposals, acquisitions, dispositions, public offerings and potential mergers were also listed in the original agreement.
The SEC’s demand came after a tweet from the CEO in August 2018. In the comment in question, Musk reveals an interest in taking Tesla public, trading its shares at $420.
In addition, the executive stated that he had “guaranteed financing”. However, it was an ongoing negotiation, not yet approved.
Production or sales number
In February 2019, Musk published that Tesla would manufacture 500,000 cars. However, soon after, the information was corrected to 400 thousand.
Despite the rectification, the SEC asked a US federal judge to consider arresting Musk in contempt. Regulators understood that the billionaire’s original publication violated the agreement signed in 2018.
“Once again it published inaccurate and material information about Tesla to its more than 24 million Twitter followers,” the SEC said at the time. (Elon Musk is banned)
In addition to information about car production, Musk also needs the go-ahead when commenting on sales and delivery data.
Lines of business or proposals
This is a topic that Musk admirers often discuss on social media. In November 2019, a user asked if Tesla would not manufacture electric vans.
The CEO replied that “it might be interesting to work with Daimler” to develop an electric version of the van Sprinter.
Projections and Estimates
Comments on Tesla’s forecasts or estimates also require technical market analysis. That’s because the SEC understands that some information may sound like guidance to investors.
In 2018, Musk said the company would exhibit positive cash flow in the second half of the year. However, the statement came before the company presented its official results to investors.
Bonds and financing
Issues related to bonds, credit facilities, financing or loans were also listed by the SEC.
In this question, for example, would fit Musk’s comment about having financing to take the company public.
Discovery or legal decisions
Records, legal or regulatory decisions were also scored by the SEC. Mainly, if Musk intends to refute the determinations imposed by the regulators.
Events that require the 8-K form
Events that require filling out the 8-K form must also be respected by the millionaire.
This is a procedure that companies use to archive or cover corporate news, such as changing top executives. Contents in this sense usually move stocks on the stock exchange.
In Tesla’s case, the SEC wants to ensure that Musk does not publish this type of information without permission.
Finally, the SEC has accepted that Tesla’s executive board also opine and suggest other topics to be included in the process.
In this way, the company’s management would work in “partnership” with the regulators to avoid future problems.
SEC accuses Tesla of violating the agreement
Despite all the specifications of the 2018 deal, the SEC accuses Tesla of not complying with the deal.
Regulators notified the company with publications for 2019 and 2020. While one displayed data on the production of solar roofs, the other addressed stock prices. It is unclear whether the SEC will take legal action against Musk, Tesla or both.