Published: Sun, October 07, 2018
Business | By Pearl Harrison

Teslas Musk, ordered to defend fraud settlement, takes aim at SEC

Teslas Musk, ordered to defend fraud settlement, takes aim at SEC

Elon Musk is again under the limelight as the Securities and Exchange Commission has accused him of the fraud and has filed a lawsuit.

On the same day, Musk mocked the SEC on Twitter, calling it the "Shortseller Enrichment Commission". "And the name change is so on point!" he said on Twitter.

The SEC declined to comment Thursday.

Einhorn said Tesla has "many parallels" to Lehman, which he said "threatened short sellers, refused to raise capital (it even bought back stock), and management publicly suggested it would go private".

The settlement also required Tesla's board to implement procedures for reviewing Musk's communications with investors, which include tweets. That caused the company's stock to soar.

Thomas Gorman, a partner at Dorsey & Whitney in Washington, D.C., said Musk might argue that the latest tweet might be a mere "personal lament", and not a violation of the settlement. The agency ultimately filed a lawsuit against the billionaire chief executive last week.

In the settlement announced over the weekend, Tesla and Musk agreed to pay $20 million each to the regulator while Musk, also a large Tesla shareholder, would step down as chairman but continue as CEO.

Several Twitter users also criticized Musk, who has over 20 million followers on the social media platform, for his tweets targeting regulators and short sellers.

Stephanie Avakian, co-director of the SEC's division of enforcement, during a press conference emphasised that the CEO of a public company has to be careful about making comments publically. Last week, the SEC sought to prohibit him from serving as an officer of a public company. This will target to take away the position of Elon Musk as the director of the company.

Musk and the SEC have been given a week to submit a joint letter to explain why the deal should be cleared.

But the settlement still needs court approval.

Mr. Musk's post came nearly a week after he reached a deal with the SEC to settle a lawsuit over Tweets he posted on 7 August when he said he had secured funding to take the his niche EV company private at 420/share, causing the company's stock to soar.

Nathan said it was her regular practice to request such letters. A judge has yet to approve the settlement.

Some judges have complained about being viewed as rubber stamps for SEC settlements. A higher court eventually sided with the SEC. Tesla shorts were up more than $1.2 billion after the SEC filed its lawsuit against Musk, according to S3 Partners data from September 28.

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