A federal judge in New York has ordered Tesla CEO Elon Musk to testify in an investigation by the U.S. Securities and Exchange Commission (SEC) regarding his use of Twitter. The SEC is seeking to determine whether Musk violated the terms of a previous settlement agreement by failing to have his tweets pre-approved by Tesla’s legal team. The investigation centers around a tweet from 2019 in which Musk claimed that Tesla would produce 500,000 vehicles that year, which the SEC argues was a violation of the settlement agreement.
Musk has been embroiled in legal battles with the SEC since 2018 when he tweeted that he had secured funding to take Tesla private at $420 per share. The tweet led to a significant increase in Tesla’s stock price, but the SEC alleged that Musk had not actually secured the funding as claimed. Musk and Tesla ultimately reached a settlement with the SEC, agreeing to pay $20 million each in fines and for Musk to step down as Chairman of the Board.
The recent court order requiring Musk to testify comes as part of the ongoing scrutiny over his social media use and its compliance with securities laws. The SEC has been closely monitoring Musk’s tweets and public statements, raising concerns about their potential impact on the stock market. Musk has defended his Twitter activity, arguing that he has the right to freely express himself and that his tweets are not material to Tesla’s stock.
The outcome of the SEC’s investigation and Musk’s testimony could have significant implications for both Tesla and Musk himself. As one of the most high-profile CEOs in the world, Musk’s public statements and their legal implications continue to be closely watched by investors and regulators alike. The case underscores the increasingly complex relationship between social media, corporate communications, and securities laws, as well as the challenges of regulating the public statements of influential business leaders.