Monday night, the SEC countered Tesla (NASDAQ:TSLA) CEO Elon Musk’s contempt-of-court defense writing in court papers that he brazenly disregarded a federal judge’s order and that one of his arguments “borders on the ridiculous.”
Lawyers for the Securities and Exchange Commission, in a response to Mr. Musk, wrote that when the contempt motion was filed in February, Mr. Musk had not had a single Tweet approved by a company lawyer, violating a requirement of a court-approved settlement order.
The October securities fraud settlement stemmed from tweets by Mr.Musk in August about having the money to take Tesla private at 420/share. But he did not have the funding secured.
Tesla and Mr. Musk each had to pay $20-M in fines and agree to governance changes that included Musk’s removal as Chairman of the Board.
SEC lawyers led by Cheryl Crumpton wrote in a response to Mr. Musk’s defense that he interprets the settlement order as not requiring pre-approval unless Mr.Musk decides the Tweets are meaningful to investors. The Commission said Mr. Musk’s argument that Tweeting about car production forecasts on 19 February was not material information is nearly ridiculous. “His interpretation is inconsistent with the plain terms of this court’s order and renders its pre-approval requirement meaningless,” the lawyers wrote.
Mr. Musk’s lawyers also argued that the SEC’s motion for contempt is an over-reach that exceeds its authority. But the SEC said enforcement of the order is up to the judge, who has broad powers to enforce court orders.
US District Judge Alison Nathan in Manhattan will decide if Musk is in contempt and whether he should be punished. The SEC said no hearing is necessary on the matter “because there appear to be no disputed issues of material fact.”