Billionaire Tesla founder Elon Musk and regulators from the U.S. Securities and Exchange Commission have resolved their dispute over the Tesla CEO’s tweets, with the billionaire assenting to having his future communications relating to the electric-car maker pre-approved by a company-employed expert.
Musk and the SEC reached the agreement, which they detailed in filings Friday in federal court in Manhattan. According to a report by news website Star Advertiser, the agreement must be approved by U.S. District Judge Alison Nathan, who has presided over the case.
The new agreement means that Elon Musk would no longer face the risk of being held in contempt as the SEC has ordered. The SEC had alleged that Musk infringed a previous settlement requiring his tweets to be approved by an attorney if they reveal important company facts.
According to the SEC, Musk violated the deal on the 19th of February with a tweet about Tesla vehicle production that wasn’t approved by the company’s “disclosure counsel.” The agency argued that Musk hadn’t sought the attorney’s approval for a single tweet.
Musk’s attorneys on the other hand argued that the SEC was violating Musk’s First Amendment rights to free speech as his tweet that Tesla would produce about 500,000 vehicles this year did not require approval primarily because it wasn’t new information that would be meaningful to investors.
The new agreement compels the billionaire to get consent in advance from “an experienced securities lawyer” employed by Tesla before he issues any written communication on social media or elsewhere on a wide range of financial topics including the company’s financial condition, sales numbers and results through potential mergers, new business lines and changes in top executive positions among other topics.
News of the settlement came one day after Musk and the SEC attorneys told U.S. District Judge Alison Nathan that they were still working out an agreement and required an extension of their deadline, to Tuesday.
This case goes back to a settlement reached last September after the billionaire tweeted that he had secured the funding to take Tesla private at $420 a share — a significant premium over the company’s stock price at the time — when he hadn’t. That tweet, published in August last year, gave Tesla’s stock price a shot in the arm. The SEC argues that the tweet hurt investors who purchased Tesla shares after the tweet but before they had reliable information.
Musk subsequently backed off the idea of taking Tesla private, but the SEC concluded he had not actually raised the money to pull of the deal.