In what seems to be a long and endless standoff, the SEC has come out and stated that Tesla has failed to regulate the CEO’s use of his social media platforms. The whole skirmish began in 2018 after the SEC claimed that his usage of the social accounts was, in one way or another, misleading investors. Following the event, Mr. Musk was made to pay a hefty penalty of 20 million dollars. On top of it, Tesla’s lawyers were tasked with pre-approving posts by the CEO before being officially broadcast.
The unusual condition by the SEC did come with challenges and was also somewhat challenging to implement. It was due to the missing clear line on what to regulate and what not to regulate. In early 2019, the SEC took to the courts to accuse the CEO of failing to adhere to the agreement. The judge instructed the two parties to settle the issue, which led to the revision of the agreement. The selected topics were put forward as sensitive this time, and Mr. Musk was not to make comments about them without approval.
On May 1st, the business mogul remarked on Twitter that Tesla’s stock is too high, which caused a rapid drop in its stock prices. Once again, this spooked the SEC. In a letter by Mr. Buchholz, a sen-ior executive at the government agency, Tesla was asked to submit records about the approval of the tweet claiming it indeed had some connection to the company’s financial condition. The electric car maker stated that there were no records and that the tweet was just a personal opinion and hence did not require any approval.
Tesla’s lawyers have consequently made accusations that the SEC could be targeting Mr. Musk and that they were unfairly harassing the CEO. It is not the first time the businessman has clashed with the authorities. As of this post, Tesla has had disagreements with the National Transportation and Safety Board and Occupational Safety and Health Administration in Nevada. Although Mr. Musk has tried to play safely in his recent social media posts about his companies, he has not shied away from lashing out at the government agencies for coming after him. In what has been dubbed the Musk Effect, pundits say that it is with no doubt that Elon Musk has massive influence over the masses. How he uses this power brings the bone of contention and should be looked at carefully without bias.