Tesla and CEO Elon Musk are accusing the SEC of harassment and curtailing his free speech.
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Tesla and the company's chief executive Elon Musk made a stunning accusation against the Securities and Exchange Commission (SEC) on Thursday, February 17, saying that the federal agency has been targeting them with an "unrelenting" investigation to punish the billionaire owner for being an outspoken critic of the U.S. government.
Tesla and Musk's accusation of the SEC curtailing his free speech came via a letter addressed to U.S. District Judge Alison Nathan in Manhattan. He was the judge who presided over Tesla's 2018 settlement with the SEC, which stemmed from Musk's tweet regarding a potential buyout of the auto giant.
The Tesla CEO was charged before the settlement with making false and misleading statements because of that tweet. As part of the agreement with the SEC, Musk was ordered to pay a massive $20 million fine and was forced to relinquish his post as chairman of Tesla for three years. Tesla, for that matter, was also required to pay a separate $20 million fine, and was ordered to monitor its chief executive's statements about the carmaker on social media platforms such as Twitter.
Tesla accuses SEC of breaking its promises
As per The Verge, Musk's attorneys alleged that the SEC broke its promises in that previously agreed-upon settlement. In Thursday's letter, lawyer Alex Spiro accused the SEC of ignoring its commitment to distribute the US$40 million in fines the agency collected from Tesla and Musk to shareholders. Spiro added that the SEC is devoting instead its "formidable resources to endless, unfounded investigations" into Tesla and Musk.
Spiro wrote that the SEC's outsized efforts seem calculated to chill Musk's exercise of his First Amendment rights. Judge Nathan has ordered the SEC to respond to Musk and Tesla's allegations by February 24.
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Musk's letter is the latest chapter in the Tesla vs SEC wars
The SEC has tussled with Musk multiple times since that settlement was agreed in 2018. The agency asked a federal judge to hold the Tesla CEO in contempt in February 2019 for posting a tweet that claimed the company would make "around" 500,000 electric vehicles that year.
Musk's statement contradicted Tesla's official guidance that the automaker would deliver between 360,000 and 400,000 total vehicles in 2019. The SEC said that Musk was in "blatant violation" of the 2018 settlement, while Musk countered by saying the federal agency was trying to make an "unconstitutional power grab." Nathan ordered the two sides to work things out, telling Tesla and SEC to come back with their reasonableness pants on.
The SEC then issued a new subpoena on November 2021, this time taking issue with Musk's tweet where he asked his followers via a poll whether he should sell 10 percent of his stake at Tesla. The company's shares dropped 16 percent in the trading days following Musk's post on Twitter.
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