NEW YORK -- Elon Musk and the U.S. Securities and Exchange Commission told a judge they still need more time to resolve a legal fight over his tweeting habits.
In a joint letter to U.S. District Judge Alison Nathan, Tesla Inc.’s CEO and the securities regulator said Thursday that talks over the past three weeks had yet to produce a settlement in the legal dispute over how Musk posts news about his electric-car company. Last week, Nathan extended the deadline to April 25. Meanwhile, Musk has continued to tweet. The agency and Musk asked Thursday for another five days to continue discussions, promising to update her by April 30.
Nathan approved the plan on Friday, granting the second extension in as many weeks of her deadline for negotiations. The agency and Musk promised to update the judge on their progress by April 30.
Tesla shares fell 5 percent to close at $235.14 on Friday -- it's lowest price in two years.
The SEC had argued that a Feb. 19 comment by Musk on Twitter violated an October settlement of an earlier brouhaha sparked by his proclamations on social media. Musk said he hadn’t violated the agreement. The regulator asked the judge to find Musk in contempt of court, which could mean hefty fines and new controls on how he communicates with the public.
'Reasonableness pants'
At an April 4 hearing, Nathan urged both sides to “put on your reasonableness pants” and work something out. Without an agreement, she said she would determine whether the billionaire should be held in contempt of court. If the judge rules against the CEO, the regulator has indicated it will ask her to impose a series of escalating fines and monthly reports on Musk’s tweets to keep him in line.
The judge had urged both sides to eliminate ambiguities in the earlier settlement, which required Musk to get internal approval before issuing some tweets. A new compromise would help Musk avoid more penalties while the SEC affirms the Tesla chief’s obligation not to release misleading information on social media.
Musk and the SEC have been fighting since the CEO tweeted Aug. 7 that he had “funding secured” to take Tesla private, sending the shares surging. After an investigation, the regulator sued, saying Musk had misled investors. Musk and Tesla ended that dispute by agreeing to each pay $20 million, without admitting wrongdoing.
Twitter sitter
As part of the October deal, they also agreed that any future social media posts by the CEO would be reviewed by a lawyer -- known as Musk’s Twitter sitter -- for any information that might affect investors’ decisions. The SEC said Musk violated that agreement when he tweeted in February that Tesla would make about half a million cars in 2019. He corrected that a few hours later, after consulting with the internal lawyer, with a tweet saying deliveries would reach only about 400,000.
The regulator argued that Musk was required to have his tweet approved in advance under the terms of the settlement. Musk’s attorneys countered that the post wasn’t material and that the Tesla CEO has been complying with the accord.
This past weekend, Musk repeated his February claim, responding to another Twitter user’s post by tweeting “Tesla will make over 500k cars in next 12 months.”
