Elon Musk, Tesla sued over ‘erratic’ share price Twitter posts
An unhappy Tesla investor is suing over social media posts from the man the electric car company is “heavily dependent” on.
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A Tesla investor is suing its CEO Elon Musk and the board of the company for allegedly failing to curtail Mr Musk’s “erratic” tweeting, potentially violating a deal it made with a US financial regulator.
In court documents posted by Bloomberg Law, the investor argues Mr Musk is exposing the company to billions in liability and losses with his use of social media, which is supposed to be approved by the company, accusing Mr Musk of failing to comply with the terms of an agreement between Tesla, Mr Musk and the US Securities and Exchange Commission (SEC), stemming from an incident in 2018.
At that time, Mr Musk jokingly tweeted that he would be taking Tesla private at $420 a share.
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That was a reference to cannabis culture and a steep mark-up on the price of Tesla shares, prompting an investigation of potential market manipulation.
Tesla and Mr Musk settled, both paying $US20 million ($A25.7 million).
Mr Musk was forced to step down as Tesla chairman for three years and was supposed to gain approval for his use of social media from the board after that time.
It only took a few months before the SEC accused him of breaching the agreement, asking a judge to hold Mr Musk in contempt over a 2019 tweet where he said Tesla would make around half a million cars in that year.
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Tesla made 0 cars in 2011, but will make around 500k in 2019
— Elon Musk (@elonmusk) February 20, 2019
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The SEC argued Mr Musk had “once again published inaccurate and material information” about Tesla, but the company argued that he was merely restating an earlier, approved statement from an earnings call the month before.
Following that case the agreement was amended to set further limits on Mr Musk’s tweeting, including adding specific topics Mr Musk was not supposed to tweet about without approval from a Tesla lawyer.
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That included things like the company’s financial condition, potential mergers, production and sales numbers and any new products or projections that hadn’t been announced earlier.
Mr Musk later tweeted about the price of Tesla’s stock being “too high”, prompting one analyst to tell Bloombergthat “it’s certainty a headache for investors for him to venture into this area as his tweeting remains a hot-button issue”.
The new lawsuit, filed in the “tax-friendly” state of Delaware where Tesla is incorporated, argues that “further unchecked tweeting by (Mr) Musk” could stop the company securing financing and drive away people who try to keep Mr Musk in check on behalf of the company.
Tesla admitted in its most recent annual report, as it also did the previous year, that it’s “highly dependent on the services of Elon Musk”, its CEO and largest shareholder.
Originally published as Elon Musk, Tesla sued over ‘erratic’ share price Twitter posts
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