Elon Musk accuses the SEC of illegally leaking details of his Tesla investigation

Allegations in a court filing did not reveal the contents of the alleged leak, the name of the staff member who allegedly leaked the information or where it was reported. Most of the reporting on Musk’s battles with the agency over the past week has been based on court documents that are part of the public record.

But this latest missive from Musk’s lawyers revealed that she had sent a letter to the agency’s inspector general requesting an investigation into the agency’s conduct in its investigations of Tesla and Musk. Musk’s attorneys asked SEC staff “to retain their records and devices.”

The SEC declined to comment on this latest letter from Musk and his attorneys.

Musk has criticized the SEC for years, Tweeter that it is the “Shortseller Enrichment Commission”. Last week, Musk’s attorneys wrote to U.S. Judge Alison Nathan of the Southern District of New York arguing that the SEC continues to target Musk because he “remains a vocal critic of the government” and that investigations ongoing on his public comments constitute an “oversized effort” to “chill his exercise of First Amendment rights.”

On Friday, the agency, which serves as a watchdog for investors, responded with its own letter to the judge saying it had done nothing improper. This prompted the latest response from Musk’s lawyer on Monday.

A controversial agreement

Nathan oversees a 2018 consent decree between the agency, Musk and Tesla. It was after an SEC investigation into Musk’s tweet that he had “secure funding” to take Tesla private. News of the plan had Tesla’s stock skyrocketing, but it later became clear that funding was by no means guaranteed.
As part of the consent decree, Musk relinquished his role as Tesla chairman, although he remains CEO. He has agreed that any future social media posts that may contain material company information will be reviewed by other Tesla executives before sending them. He and Tesla also each paid a $20 million fine, with Musk compensating the company for his payment by buying an additional $20 million in Tesla stock.

Letters from Musk’s attorneys last week and again on Monday complained that the SEC had not distributed those funds to Tesla shareholders. The SEC, in its letter on Friday, said the distribution was a complex matter and that it expected to have a final distribution plan ready for court approval by the end. of the month of March.

An active investigation

Musk hasn’t been shy about tweeting since the 2018 consent decree was passed and it’s unclear just how much outside scrutiny his tweets have on Tesla, despite the settlement.

What is clear is that the SEC has continued to monitor its activity and is not happy with everything it sees.

Earlier this month, Tesla’s annual financial filing revealed that the company had received a subpoena from the SEC “requesting information about our governance processes regarding compliance with SEC regulations.”
The subpoena came days after Musk conducted a Twitter poll in November asking if he should sell 10% of his shares and pledging to do so if the majority of respondents agreed, which ‘they did. Shares of You’re here (TSLA) fell on the first trading day after the poll.
As Musk began selling his shares later in November, it became clear that most of the sales were made in order to pay the taxes he faced on exercising stock options that would soon arrive. expired, not as a result of the Twitter poll. Because of this option exercise, he ended up owning more shares of Tesla at the end of the year than when he released the poll.

The company also disclosed in its filing that the SEC issued a subpoena to Tesla in December seeking “certain financial data and contracts, including Tesla’s regular financial arrangements.” But Tesla said the agency later informed the company that the investigation was complete.

In its Friday response to Musk’s earlier letter, the agency said it had “issued no subpoenas in this litigation,” suggesting that the subpoenas leaked by Tesla had been part of new investigations being conducted. by the agency.

Musk’s Monday letter called the SEC’s claim “dishonest at best.”


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