Tesla CEO Elon Musk is stepping up his battle with the Securities and Exchange Commission (SEC), accusing a staff member of illegally leaking the results of an investigation.
Musk said the regulator is trying to “arm” an earlier consent decree he and Tesla signed “for illicit purposes.”
Allegations in a court case did not disclose the contents of the alleged leak, the name of the employee who allegedly leaked the information or where it was reported. Most of the reporting on Musk’s battles with the agency over the past week has been based on court documents that are part of the public record.
But this latest letter from Musk’s lawyers revealed that he sent a letter to the agency’s inspector general requesting an investigation into the agency’s conduct in its investigations of Tesla and Musk. Musk’s lawyers demanded that the SEC team “preserve his records and devices.”
The SEC declined to comment on this latest letter from Musk and his lawyers.
Musk has criticized the SEC for years, tweeting that it is the “Shortseller Seller Enrichment Commission.” Last week, Musk’s lawyers wrote to US Judge Alison Nathan of New York, arguing that the SEC continued to attack Musk because he “remains an outspoken critic of the government” and that ongoing investigations of his public comments constitute a “disproportionate effort” to “relax your exercise of First Amendment rights.”
Last Friday (18), the agency, which acts as an investor watchdog, responded with its own letter to the judge claiming it had done nothing improper. That led to the latest response from Musk’s lawyer on Monday.
controversial agreement
Nathan oversees a consent decree reached in 2018 between the agency, Musk and Tesla.
This came after an SEC investigation into Musk’s tweet that he had “guaranteed funding” to take Tesla private. News of that plan sent Tesla stock soaring, but it later became clear that funding was not guaranteed.
As part of the consent decree, Musk resigned as president of Tesla, although he remains CEO. He has agreed to have any of his future social media posts that may contain relevant information about the company reviewed by other Tesla executives before submitting them.
He and Tesla also paid a $20 million fine, with Musk compensating the company for its payment by buying an additional $20 million worth of Tesla stock.
Letters from Musk’s lawyers last week and again on Monday complained about the SEC failing to distribute these funds to Tesla shareholders.
The SEC in its Friday letter said the distribution was a complex matter and that it expected to have a final distribution plan ready for court approval by the end of March.
An active investigation
Musk hasn’t been shy about tweeting since the 2018 consent decree was reached, and it’s unclear exactly how much outside oversight his tweets receive at Tesla despite the deal.
What is clear is that the SEC has continued to monitor its activity and is not happy with everything it sees.
Earlier this month, Tesla’s annual financial filing disclosed that the company received a subpoena from the SEC “seeking information about our governance processes pursuant to the SEC settlement.”
That subpoena came days after Musk conducted a Twitter poll in November asking if he should sell 10% of his stock and pledging to do so if a majority of respondents agreed, which they did. Tesla shares fell on the first day of trading after the survey.
When Musk began selling his shares in late November, it was clear that most of the sales were being made to pay the taxes he faced when exercising near-expiring stock options, rather than as a result of Twitter’s research.
Because of this exercise of options, he ended up owning more Tesla shares at the end of the year than he did when he published the research.
The company also disclosed in its filing that the SEC issued a subpoena to Tesla in December seeking “certain financial data and contracts, including Tesla’s regular financial arrangements.” But Tesla said the agency later notified the company that the investigation had been completed.
In its Friday response to Musk’s earlier letter, the agency said it “had not issued any subpoenas in this litigation,” suggesting that the subpoenas released by Tesla were part of new agency investigations.
Musk’s letter on Monday called this SEC claim “false at best.”
Source: CNN Brasil
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