SEC Is Making "Unconstitutional Power Grab" Against Elon Musk, Lawyer Claims

A recent tweet has got Elon Musk in trouble with the SEC again.

Musk’s lawyer on Monday submitted a 33-page filing to the court to defend Tesla’s CEO. Last September, Musk and the Sec signed an agreement that forbade the billionaire from using social media to spread information considered material by investors. Last month, the SEC requested to hold Musk in contempt due to his violation of this agreement by tweeting a production estimation of Tesla.

Musk’s tweet, which was posted on February 19, said that Tesla made zero cars back in 2011, but the company will produce about 5 lakh this year, which was clarified after 30 minutes. Musk explained that at the end of 2019, Tesla’s annual production rate may be about 500,000, which means 10,000 cars per week with 2019’s delivery to be around 400,000 units.

The filing on Monday stated that there is no basis for the SEC to rely on to issue contempt sanction against Musk, considering the order an “unconstitutional power grab.”

Musk’s lawyer argued that the tweet did not include any information which could potentially be material.

According to the agreement signed with the SEC, the CEO agreed to get approval before publicizing tweets that can impact the company’s market prospect. While the tweet about Tesla’s production estimates did not get such preapproval, the court filing argued that it was consistent with the already publicly known info.

As stated in the document:

Last month, after the SEC requested to hold Musk in contempt, Tesla’s shares fell by 4.6 percent during after-hours trading. The document said Musk’s tweet on February 19 didn’t cause any considerable movement.