Judge Gives Musk, Regulators 2 Weeks to Settle Dispute - NBC New York
National & International News
The day’s top national and international news

Judge Gives Musk, Regulators 2 Weeks to Settle Dispute

The judge ordered both sides to try to negotiate a resolution over the next two weeks as she expressed reluctance to rule unless she must, calling contempt findings "serious business"

    processing...

    NEWSLETTERS

    Judge Gives Musk, Regulators 2 Weeks to Settle Dispute
    Drew Angerer/Getty Images
    Tesla CEO Elon Musk arrives at federal court, April 4, 2019 in New York City. A federal judge will hear oral arguments this afternoon in a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) that seeks to hold Musk in contempt for violating a settlement deal.

    A judge urged the Securities and Exchange Commission and Tesla CEO Elon Musk Thursday to amicably settle their dispute over his tweets or she'll decide whether to grant the regulatory agency's request that the outspoken boss face escalating fines if he breaks its rules protecting investors.

    SEC attorney Cheryl Crumpton recommended that U.S. District Judge Alison J. Nathan fine Musk if she finds him in contempt for violating a deal with the SEC that requires him to clear tweets that might disclose important company facts with lawyers.

    At the end of the hearing, the judge ordered both sides to try to negotiate a resolution over the next two weeks as she expressed reluctance to rule unless she must, calling contempt findings "serious business."

    "Everybody take a deep breath, put your reasonableness pants on and work this out," Nathan said.

    Defense Department Looking Into Musk's Security Clearance

    [BAY] Defense Department Looking Into Musk's Security Clearance

    After Tesla CEO Elon Musk went on Joe Rogan's show and smoked weed during the recording of his podcast, the U.S. Department of Defense is now looking into the billionaire's security clearance over the drug use.

    (Published Friday, March 8, 2019)

    Even so, Nathan said court-supervised agreements must be obeyed.

    "I don't care if you are a small potato or a big fish," Nathan said as Musk, with an estimated worth of $22 billion, sat at a defense table with his lawyers.

    Musk, who followed the back-and-forth intently with a slight frown and furrowed brow, emerged from the courtroom to say: "I'm very happy with the result and I'm impressed with Judge Nathan's analysis."

    The issue over Musk's tweets stems from a settlement reached last year after Musk tweeted that he had secured the funding to take Tesla private at $420 a share — a substantial premium over the price at the time — when he did not. That tweet, last August, sent the company's stock on a wild ride. The SEC says it hurt investors who bought Tesla stock after the tweet but before they had accurate information.

    Musk later backed off the idea of taking the company private, but regulators concluded he had not lined up the money to pull off the deal.

    As part of the settlement, Musk begrudgingly agreed to seek approval from a company lawyer before he tweets.

    Tesla Finally Launches Model 3 for $35K

    [BAY] Tesla Finally Launches Model 3 for $35K

    At long last, the $35,000 Tesla Model 3 is a reality. After teasing "news" on Twitter, Tesla CEO Elon Musk has delivered the lowest-price Tesla yet. Scott Budman reports.

    (Published Thursday, Feb. 28, 2019)

    The SEC says Musk blatantly violated the settlement in February when he tweeted about Tesla's vehicle production without a lawyer's approval. Musk said his tweet didn't need pre-approval because it wasn't new information that would be meaningful to investors.

    Much of the debate Thursday centered around whether the SEC rules provide a clear way to for Musk to determine whether or not the information he's about to tweet would be material to investors and, therefore, require preapproval from lawyers.

    Nathan pressed Crumpton during the hearing to define the conditions under which Musk should seek approval before he tweets, and drew attention to ambiguity surrounding the rules the SEC sought to enforce.

    Attorney John Hueston, representing Musk, said the SEC's first step after the tweet about production should have been to approach Tesla in good faith, and Nathan agreed.

    Hueston said further restricting Musk's ability to communicate about his company and imposing fines would "freeze his ability" to operate as an effective entrepreneur.

    Hueston also told the judge the SEC had failed to show his client had violated the deal. He said his client "actually does what he is told."

    Meanwhile, Tesla's shares fell 8% Thursday after the company said it churned out 77,100 vehicles in the first quarter, well behind the pace it must sustain to fulfill Musk's pledge to manufacture 500,000 cars annually.

    Tesla also said it only delivered 63,000 vehicles in the quarter, down 31% from 2018's fourth quarter.

    As of Thursday's close, Tesla shares were down 19.5% so far this year.

    The SEC sought to oust Musk from his role as chairman and CEO over his August tweet. Instead, Musk and Tesla agreed to pay $40 million and made other concessions to settle the case. Musk agreed to step down as chairman for three years and remain in his role as CEO.

    Musk's unpredictable behavior has led some to question whether he should remain CEO of Tesla, while others say he's the visionary behind the company and too valuable to lose. Last year, Musk berated stock market analysts for asking questions about Tesla's finances and prompted a defamation lawsuit when he called a diver who helped rescue 12 boys on a Thai soccer team from a flooded cave a pedophile.