NEW YORK -- Elon Musk is about to urge a judge to go easy on him for tweets that U.S. regulators contend violated a court order, though legal experts say the pugnacious billionaire will have a hard time avoiding some kind of punishment.
The founder of electric-car maker Tesla Inc. is in hot water with the Securities and Exchange Commission over statements last month to his 25 million Twitter followers about the company’s vehicle deliveries. The SEC says the missives violate terms of an earlier settlement prompted by his misleading August tweets about taking Tesla private.
“The SEC will press hard on this,” said Stephen Crimmins, a former agency enforcement lawyer who is now a partner at Murphy & McGonigle. “Disobeying an order of the court is an insult to the court and the judge. So the court has to take this seriously."
At the SEC’s request, U.S. District Judge Alison Nathan in Manhattan ordered Musk to explain by Monday why he shouldn’t be held in contempt of court. In an earlier settlement over his August tweets, Musk was fined $20 million, forced to give up his job as Tesla chairman, and required to consult a so-called Twitter Sitter before posting statements about the company on social media.
Musk, who remains CEO and Tesla’s largest shareholder, has already given signs of his legal arguments -- that he didn’t disclose new information, the statements weren’t significant enough to get a reasonable investor to buy or sell Tesla shares, and he shouldn’t face penalties that would hurt the company.