Recently, Tesla revealed that it received a subpoena from the Securities Exchange Commission in November of 2021. The SEC subpoenaed the carmaker shortly after Elon Musk posted a Twitter poll asking if he should sell some of his Tesla shares. That poll impacted Tesla’s stock price. However, this is not the first time that Elon Musk’s tweets have brought the electric car giant under the gaze of the SEC. In fact, the November subpoena is just the latest in a years-long feud between Musk and the SEC.
- The SEC subpoenaed Tesla in November of 2021.
- Per a settlement with the SEC, Elon Musk’s tweets are subject to vetting by Tesla attorneys.
- A Twitter poll may violate the terms of that settlement.
- The SEC has investigated Tesla multiple times due to Musk’s tweets
Elon Musk’s Tweets Draw the Eye of the SEC, Again
Earlier this month, Tesla submitted its 10-K form to the Securities Exchange Commission. In that form, they noted a 2018 settlement with the SEC due to Elon Musk’s tweets. Then, the company noted that they and the SEC updated the terms of that settlement in 2019.
According to the form, the SEC subpoenaed Tesla on November 16th, 2021. This subpoena was “seeking information on the governance process around compliance with the SEC settlement, as amended.” However, the 10-K form did not elaborate on what triggered the subpoena. There’s a good chance that Elon Musk’s tweets are to blame yet again.
Ten days before the SEC issued the subpoena, Elon Musk tweeted a poll. He wanted to know if his followers thought he should sell 10% of his stock in Tesla. According to The Verge, Tesla’s stocks dropped 16% over the next two trading days.
A Brief Look at Tesla’s Settlement with the SEC
In 2018, Musk tweeted that he planned on taking Tesla private for $420 per share. Elon Musk also said that he had secured the funding to make the transition. Additionally, he stated that the automaker would be able to buy out any shareholders who didn’t want to stay with the company after the transition.
Elon Musk sent these tweets during active trading. As a result, Tesla’s stocks jumped. Then, days later, they dropped again. This caught the eye of the SEC. They launched an investigation and found that Musk was overpromising, according to The Verge. The SEC found that while Musk did meet with Saudi Arabia’s sovereign wealth fund, he had not discussed taking the company private. Furthermore, he had “done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company” nor had he confirmed support of Tesla’s shareholders for the transition.
In 2019, the SEC and Tesla came to an agreement. The settlement stated that both Musk and Tesla would pay hefty fines to the SEC. Furthermore, Musk stepped down as the automaker’s chairman of the board. Most relevantly, though, the settlement stated that Elon Musk’s tweets that talked about Tesla’s finances, sales, or production numbers had to be vetted by a company attorney.
That, of course, takes us back to the most recent subpoena and Musk’s Twitter poll. It could be that they believed Elon Musk’s tweets were once again running afoul of their agreement. However, the automaker has not elaborated further than what is contained in the publicly-available report.