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As Tesla heads to court, shares fall as deliveries slow
Class Action Law Suits |
2019/04/01 15:59
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Tesla's CEO Elon Musk is back in the spotlight for saying something when perhaps he should have remained quiet.
A federal judge will hear oral arguments Thursday about whether Musk should be held in contempt of court for violating an agreement with the U.S. Securities and Exchange Commission.
The SEC says Musk blatantly violated the settlement in February when he tweeted about Tesla's vehicle production without a lawyer's approval.
It's unclear if Musk plans to attend the hearing. If he is found in contempt of court, Musk could face fines or even jail time.
Musk's 13-word tweet on Feb. 19 said Tesla would produce around 500,000 vehicles this year. But the tweet wasn't approved by Tesla's "disclosure counsel," and when the contempt-of-court motion was filed in February Musk had not sought a lawyer's approval for a single tweet, the SEC said.
Musk said his tweet about car production didn't need pre-approval because it wasn't new information that would be meaningful to investors. His attorneys say the SEC is violating his First Amendment rights to free speech.
The SEC says the arrangement doesn't restrict Musk's freedom of speech because as long as his statements are not false or misleading, they would be approved.
Meanwhile, Tesla's shares fell 8% in midday trading Thursday after the company said it churned out 77,100 vehicles in the first quarter, well behind the pace it must sustain to fulfill Musk's pledge to manufacture 500,000 cars annually. |
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