Tesla shares fall on report SEC asks judge to hold Elon Musk in contempt for violating deal

Robyn Beck | Bloomberg | Getty Images

Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during an unveiling event for the Boring Co. Hawthorne test tunnel in Hawthorne, California, U.S., on Tuesday, Dec. 18, 2018.

Shares of Tesla fell nearly 5 percent after the SEC has asked a judge to hold Elon Musk in contempt for violating its deal. The SEC cited an “inaccurate” February 19 tweet about production, Bloomberg previously reported.

Musk: “Tesla made 0 cars in 2011, but will make around 500k in 2019”

On that date, Elon Musk tweeted — then revised — projections for full-year Tesla manufacturing numbers.

The CEO said that Tesla would make “around” 500,000 vehicles this year, clarifying about four hours later that he “meant to say” the company’s annualized production rate at the end of 2019 could be around 500,000 vehicles — or a production rate of 10,000 cars per week. Total deliveries for the year are still estimated at 400,000, Musk said.

“Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people,” the SEC wrote in the court filing.

The Securities and Exchange Commission settled charges with Musk and Tesla over the CEO’s aborted bid to take the company private last fall, with the billionaire remaining as the helm of the company but relinquishing his chairman title and getting slapped with a $20 million fine.

The SEC’s enforcement action is the next step in a saga which began in early August, when Musk announced via Twitter that he had secured enough funding for a massive private buyout of Tesla. The SEC complaint alleged that in doing so, Musk issued “false and misleading” statements, and failed to properly notify regulators of material company events. Under the deal’s terms, Musk and Tesla neither admit or deny wrongdoing alleged by regulators.

“This matter reaffirms an important principle embodied in our disclosure-based federal securities laws,” SEC chairman Jay Clayton said in a statement in September.

“Specifically, when companies and corporate insiders make statements, they must act responsibly, including endeavoring to ensure the statements are not false or misleading and do not omit information a reasonable investor would consider important in making an investment decision,” Clayton added.

This story is developing. Please check back for updates.