Judge tells Musk, US financial regulators to revisit settlement

New York —  Tesla founder Elon Musk and the US Securities and Exchange Commission have two weeks to reconcile clashing interpretations of the deal they signed last year to settle charges the tech billionaire boosted the electric-car maker’s share price with “fraudulent” Twitter messages, a judge said Thursday.

US District Judge Alison Nathan instructed attorneys for Musk and the SEC to begin talks as soon as possible and to report back to her on April 18.

“Put your reasonableness pants on,” she told both parties during a two-hour hearing in New York on Thursday.

The SEC was seeking to have Musk found in contempt of court for violating the part of their September 2018 settlement that required the CEO to submit his social media messages about Tesla to an executive committee for prior approval.

The SEC initially sued Musk and Tesla after the founder and CEO said in a series of tweets on Aug. 7, 2018, that he was considering taking the company private and that he had secured funding for such an operation.

Tesla’s stock price surged more than 6 percent on the news.

The SEC said that Musk “knew that the potential transaction was uncertain and subject to numerous contingencies” and that he had not discussed “specific deal terms, including price, with any potential financing partners.”

The suit was dropped after the sides reached an accord that required Musk to step down as Tesla’s chairman, though he was allowed to retain the CEO post.

Musk and Tesla also each agreed to pay $20 million in penalties and the company vowed to appoint an independent chairman.

Tesla likewise pledged to “establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications.”

The SEC said that a Feb. 19 tweet by Musk regarding projected production in 2019 represented a breach of the settlement.

Musk said that Tesla would turn out roughly 500,000 units this year, but subsequently tweeted that the number of cars delivered in 2019 would be closer to 400,000.

Despite the correction, the SEC asserted that Musk had “once again published inaccurate and material information about Tesla to his over 24 million Twitter followers.”

Lawyers for Tesla insist that the Feb. 19 tweet did not fall into the category of communications requiring advance approval.

Tesla shares fell 8 percent Thursday on the New York Stock Exchange after the company released figures showing that new-vehicle deliveries in the first quarter fell 31 percent from the previous three months.