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Musk reaches Twitter deal with US regulator

April 27, 2019

Tesla boss Elon Musk will now have to have some of his tweets approved by a company expert. The US Securities and Exchange Commission took him to court over a tweet it said violated an agreement on misleading claims.

Tesla CEO Elon Musk
Image: picture-alliance/dpa/R. Drew

Tesla CEO Elon Musk and the US Securities and Exchange Commission on Friday settled on a new agreement that will guide Musk's use of Twitter.

In February, the stock market regulator had demanded that Musk be held in contempt for a series of tweets that it says violated an agreement not to make misleading claims about his company.

In a Manhattan federal court filing, Musk agreed to have his future communications regarding the electric-car maker approved by a company-employed expert before they are published.

The new agreement, which still needs to be approved by presiding US District Judge Alison Nathan, is more specific and detailed than the previous accord.

It states that Musk may not unilaterally disseminate any information that could affect Tesla shares, including information on finances, production goals, takeovers and mergers.

Agreement 'in interest of all parties'

The SEC said the settlement was "fair, reasonable, and in the interest of the parties and investors because the proposed revisions will provide additional clarity regarding the written communications for which the defendant is required to obtain pre-approval."

It said Musk violated the original deal with a February 19 tweet about Tesla vehicle production that wasn't approved by the company's "disclosure counsel."

The agency contended that Musk hadn't sought the lawyer's approval for a single tweet.

Musk claims violation of First Amendment

Musk's attorneys argued that his tweet — that Tesla would produce about 500,000 vehicles this year — didn't need approval because it was not new information that would be meaningful to investors.

They said the SEC was violating Musk's First Amendment rights to free speech.

The original agreement was made in a settlement reached last September after Musk tweeted that he had secured the funding to take Tesla private at $420 (€375) a share — a significant premium over the company's stock price at the time — when he had not.

That tweet, last August, boosted Tesla's stock and the SEC maintains it hurt investors who bought the stock after the tweet but before they had accurate information.

The SEC said Musk had known the transaction was uncertain and sued him.

Tesla and Musk were subsequently fined $20 million each and Musk was forced to step down as Tesla chairman for three years.

law/sms (AFP, P, dpa)

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