Elon Musk’s tweets have landed him in hot water with shareholders — again. This time, he and the Tesla board are staring down a suit from one disgruntled investor who claims some of the CEO’s tweets violate a 2019 settlement Musk had reached with the U.S. Securities and Exchange Commission meant to temper his public missives about the company.
For those that might not remember, back in 2018 the SEC slapped Elon Musk with a hefty set of fraud charges after the Tesla CEO tweeted that he was considering taking the company private if the stock price hit $US420 ($542) per share. As the later lawsuit made clear, he had no financing details to back up the bad tweet, prompting a settlement with the SEC that drained Musk and Tesla itself of $US20 ($26) million. The resulting deal also mandated that Musk step down as the company’s chairman for at least three years, and that an independent committee be assigned to temper any of Musk’s public “communications” that might be relevant to shareholders — including bad tweets.
But as anyone who’s followed Musk’s Twitter feed can attest, those bad tweets haven’t gone anywhere. That’s the subject of the latest suit (which you can read here), levied against Musk by Chase Gharrity, an investor who alleges that the CEO’s “increasingly erratic” behaviour on Twitter has amounted to “millions of dollars of losses” for him and his fellow Tesla shareholders. Tesla’s board of directors are also named as defendants in the case for failing to reign Musk in after the original SEC decision.
It’s worth noting that not long after reaching the initial settlement, the SEC v. Musk battle sparked up again after Musk tweeted out Tesla’s production schedule for the year, which led the commission to ask a judge to hold Musk in contempt of court. Meanwhile, the bad tweets have only continued. One of the classics called out in Gharrity’s lawsuit include Musk’s May 2020 “Tesla stock price is too high imo” tweet that led to Tesla shares tanking by about $US13 ($17) billion.
We’ve reached out to Tesla for comment on the case, and will update here when we hear back.