US SEC Warns Elon Musk Over "Tesla Stock Seems Overpriced" Remarks

Musk Breaks Agreement, Tweets Twice Without In-House Lawyer Review
WSJ Assesses Ongoing Tension Between SEC and Musk

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] It has been revealed that Elon Musk, CEO of Tesla, violated the agreement with the U.S. Securities and Exchange Commission (SEC) to have his tweets reviewed by lawyers twice.

The Wall Street Journal (WSJ) reported on the 1st (local time) that the SEC notified Tesla last year of Musk's violation of the agreement regarding his use of Twitter.

According to documents obtained by WSJ, the SEC determined that Musk did not have his tweets reviewed by lawyers on two occasions in 2019 and 2020, when he tweeted about solar roof production and Tesla's stock price.

A document sent by the SEC's San Francisco office to Tesla in May last year pointed out, "Despite Musk's repeated violations, the company failed to implement or control the (agreement) procedures," and stated, "Tesla has abandoned the obligations imposed by the court order."

The tweet pointed out by the SEC in May last year was that "Tesla's stock price seems too high." After this tweet, Tesla's stock price plummeted by 11%, causing dissatisfaction among investors.

WSJ reported that there is still a tense atmosphere between the SEC and Musk. Musk has publicly expressed dissatisfaction by comparing the SEC to other federal regulatory agencies even after the agreement. However, WSJ noted that it appears no further disputes have occurred between the SEC and Musk.

Musk sparked controversy by tweeting in 2018 that he was considering taking Tesla private and had secured funding for it. Following Musk's tweet, Tesla's stock price plunged, and shareholder criticism intensified, prompting an SEC investigation.

Subsequently, Tesla and Musk agreed with the SEC to pay fines of $20 million each and for Tesla's lawyers to pre-approve Musk's tweets. Musk also had to step down as chairman of Tesla's board. The agreement was approved by the U.S. District Court for the Southern District of New York.

Musk has recently faced criticism for excessively promoting cryptocurrencies. While the value of cryptocurrencies surged whenever Musk supported Bitcoin and Dogecoin, he has recently been criticized for providing reasons that caused prices to fall.