Sat, Oct 06, 2018 - Page 10 News List

Musk takes jab at SEC pending deal’s approval

AP, SAN FRANCISCO

Tesla Inc chief executive Elon Musk on Thursday taunted the US government regulators who threatened to oust him as CEO of the electric carmaker, just days after he settled a case alleging that he duped investors.

Musk used his Twitter account to jab at the Securities and Exchange Commission (SEC), the agency that went after him for an Aug. 7 tweet in which he declared that he had secured financing for a Tesla buyout.

The SEC said that Musk had not locked up the estimated US$25 billion to US$50 billion that it would have required to pull off such a deal and wanted to punish him by forcing him out as Tesla’s chief executive.

After initially rejecting an SEC offer to settle the case, Musk relented two days after the fraud complaint against him and agreed to resolve the matter by having Tesla and Musk each pay a US$20 million penalty, stepping down as Tesla’s chairman and submitting to oversight about his communications of company news.

However, the deal did not prevent Musk from continuing to speak out about other subjects — a liberty that he took advantage of to bash the SEC in a tweet showing that he is still stewing about the allegations filed against him.

Musk derided the SEC as the “Shortseller Enrichment Commission” before snidely praising it for “doing incredible work.”

The tweet also stoked Musk’s long-running feud with short sellers, a category of investors that have been betting on Tesla’s stock to fall.

Tesla shares declined by more than 2 percent to US$274.50 in extended trading after Musk’s tweet.

The SEC declined to comment on Musk’s tweet. Tesla did not immediately respond to requests for comment.

Musk’s barb at the SEC does not violate the settlement, because he did not explicitly criticize it as being unfair or unwarranted, said Peter Henning, a Wayne State University, Michigan, law professor who was formerly an SEC attorney.

“But it certainly shows his pique at having to settle,” Henning said. “This isn’t something you would expect from a mature corporate leader, but he is clearly still angry and was probably reluctant to settle.”

The SEC settlement still needs court approval.

US District Judge Alison Nathan on Thursday ordered the SEC, Musk and Tesla to file documents by Thursday next week explaining why the agreement is “fair and reasonable.”

Musk’s sarcastic tweet could cause Nathan to reject the settlement if it gives her reason to believe that he “has no intention or ability to change his conduct,” University of Michigan professor of business Erik Gordon said.

As part of Musk’s settlement with the SEC, Tesla is supposed to monitor its CEO’s Twitter posts, but only those that have to do with company news. However, that does not mean that Tesla’s board cannot order Musk to tone done his Twitter posting in the best interests of the company.

“Someone has to get a hold of his Twitter account and stop him,” Henning said.

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