NEW YORK: Tesla Inc Chief Executive Elon Musk (pictured)has reached a deal with the US Securities and Exchange Commission to settle a dispute over his use of Twitter, agreeing to submit his public statements about the company’s finances and other topics to vetting by its legal counsel, according to a court filing. If it is approved by a judge, the deal means the Tesla founder no longer faces the prospect of being held in contempt for violating an earlier settlement with the agency, which had required him to submit statements “material” to investors for prior review.
The new agreement, disclosed in a filing in Manhattan federal court, lays out in more detail exactly what kinds of statements must be reviewed.
Shares of Tesla rose 1.4 per cent to $238.50 in after hours trading. The agreement lifts a cloud that has hung over Musk as Tesla tries to ramp up production of its most important vehicle, the Model 3 sedan, and make a profit at the same time.
“It could really have turned out far worse for him,” said Stephen Diamond, a professor of securities law at Santa Clara University. “The consequences of thumbing his nose at the SEC could have been far worse for him and the company.” Tesla has struggled with logistics difficulties in delivering its Model 3 to global customers, a declining share price and lingering questions about the sustainability of demand. Earlier this week, the electric vehicle maker posted a $702 million loss, and warned of a loss in the second quarter.
The SEC sued Musk last year after he tweeted on August 7 that he had “funding secured” to take Tesla private at $420 per share. The agency said the tweet, which sent Tesla’s share price up as much as 13.3 per cent, violated securities laws. Musk’s plan was at best in an early stage and financing was not in place. — Reuters
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