Elon Musk says SEC oversight is 'broken' in wake of Tesla numbers tweet

A day after the Securities and Exchange Commission chastised Tesla CEO Elon Musk, he was pushing back.

The SEC on Monday moved to have Musk held in contempt after he tweeted about Tesla's likely production volume of cars in 2019, saying he'd violated the terms of an agreement. The agency had forbidden him from using Twitter or other social media to pass along information that could be considered material to investors or Tesla without prior approval.

That action caused Tesla's shares to sink by as much as 4.6 percent in after-hours trading Monday. The stock downturn prompted a Twitter exchange in which someone suggested that while Musk's tweets didn't move the market, the SEC's filing did.

 "Exactly. This has now happened several times. Something is broken with SEC oversight," Musk wrote.

Exactly. This has now happened several times. Something is broken with SEC oversight.

— Elon Musk (@elonmusk) February 26, 2019

He responded with another "Exactly" when someone else noted that the information Musk tweeted had already been revealed in the company's fourth-quarter earnings call and a shareholder letter.

Wall Street analysts weighed in on the clash Thursday, offering both hope and hesitation for investors.

Maynard Um at Macquarie Capital pointed out that the SEC is likely looking for decisive action by Tesla's board. Even so, he wrote, the firm doesn't see a "material risk of a change to Mr. Musk's role at Tesla."

But that doesn't mean all's well.

"This new legal headache for both Elon Musk and Tesla," wrote Jeffrey Osborne at Cowen Equity Research, amounts to "a negative distraction for a company that needs to execute at this critical juncture." Cowen continues to see "major risks" given the company's valuation, cash needs and other factors.

At midday Tuesday, Tesla shares were up about 1 percent, to around $301.50.

Neither the SEC, Tesla nor Musk immediately responded to requests for comment.