Elon Musk just cannot catch a break. After a string of controversies last year, the tech giant has landed himself in deep trouble again this week, this time with the U.S. Securities and Exchange Commission.
On September 29, 2018, Musk came to a settlement with the SEC. One of the conditions was that all public statements, including tweets, made by Musk that could influence investors’ decisions must be vetted by the SEC.
The latest tussle between the two seems to stem from the Tesla CEO’s Feb 19 tweet that stated, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” On Monday, the SEC asked a judge to hold Musk in contempt since he did not seek approval for the aforementioned tweet from the SEC. As a result, Tesla’s stock fell by 5 percent.
The tech giant has since revised the numbers for 2019 production. However, it is speculated that Musk will be fined heavily for his transgression and may have to temporarily step down as CEO.
Experts suggest that the SEC should be careful in its approach. Forcing Musk to step down as CEO may damage the company irreversibly and shake investors’ faith in the brand. A former lawyer at SEC, Elliot Lutzker has revealed that since this is Musk’s first offense against the SEC, it is improbable that the Commission will seek his removal from the CEO post.
Following the SEC complaint, a federal judge has ordered Tesla and Musk to explain why he should not be held in violation of SEC rules by March 11. It remains to be seen if the wind blows in Musk’s favor, or if he will have to face suspension from the company.