Tesla shares drop more than 5% after Musk mocks SEC on Twitter

David Paul Morris | Bloomberg | Getty Images

Elon Musk, chairman and chief executive officer of Tesla Motors, speaks during an event at the company’s headquarters in Palo Alto, California.

Tesla shares dropped more than 5 percent percent Friday morning, a day after CEO Elon Musk sent out a tweet that appeared to mock the Securities and Exchange Commission, with whom Musk is trying to settle allegations of fraud.

Musk sent the tweet hours after a judge handling Musk’s settlement agreement with the SEC ordered both parties to write a joint letter explaining why the court should approve it.

Musk and Tesla each agreed to pay separate $20 million fines to settle allegations that Musk misled investors in early August by tweeting that he had already secured the funding necessary to take Tesla private. As part of the settlement deal Musk will also step down as Tesla’s chairman for three years, but will retain a seat on the board. The deal also requires that Tesla put in place a system for monitoring Musk’s public communications about the company, including his tweets.

Tesla was not immediately available for comment.

The company’s stock is down more than 12 percent since the start of the year. The stock has been volatile throughout much of 2018. It reached a 52-week high of $387.46 on Aug. 7 when Musk first said he planned to take Tesla private. As of Friday morning, shares were trading at roughly $268.