Sofiko is a freelance fintech copywriter at Coinspeaker. With a Bachelor degree in International Business and Economics, Sofiko has been deepening her knowledge of an agile innovative industry primary focusing on the robust blockchain technology and cryptocurrencies. As a bank employee, Sofiko particularly keens on crypto and blockchain integration into the established banking systems.
The renewed feud between Elon Musk and the U.S. financial authorities negatively affects Tesla stock that saw a 5% decrease at market trading.
We live in the times of rapidly evolving technologies that strive to turn over not only an operating structure of the world’s eminent enterprises but every facet of our daily routine. However, no matter how fast those nascent technologies manage to earn public attention, in the end, they always clash with the regulatory watchdog.
And when we are talking regulations in the hi-tech industry, it is imperative for regulators and businesses to work together in order to strike the right balance between encouraging innovation and protecting against negative consequences and externalities.
Yet not every representative of the innovative industry is bragging of the mutual benefits with authorities. The notorious boss of electric cars, Elon Musk has an especially poor record of business communication with the SEC that does not flavour Tesla stock.
Musk Teases SEC Tweeting Too Much
Tesla’s CEO and newly found crypto-enthusiast, Elon Musk is a very prominent public figure who leads several social media accounts to keep his fans posted. But the one that draws the particular interest of the U.S. Security and Exchange Commission is Musk’s Twitter profile that he uses to share his insight not only on the personal stuff but also on the company performance.
Last year one of these tweets almost ruined his CEO position as the SEC has accused Musk of an intentional outrage of market speculation that took place following his suggestions to buy out Tesla and make it a private company.
As a result, Tesla stock spiked almost in double leaving the market to drown in a bull run. Nevertheless, until now Tesla remains a public company with a revamped board of directors who fail to oversee its CEO’s twitter publications.
Last time the SEC penalised both Musk and the company with a $20M fine demanding Musk to step down as Tesla’s CEO. It also ruled that the company ’s lawyers should thoroughly monitor Musk’s Twitter activity preventing him from further violation of the law. It seems that at Tesla the SEC has no power since Musk is trying the commission temper with a new tweet.
Tesla Stock Tumbled Following SEC’s Accusation of Deal Break
Recently Musk’s tweeting habits have triggered another legal challenge from stock market regulators worried about him using his Twitter account to mislead investors.
Now the SEC is alleging that Musk broke the terms of that agreement with a Feb. 19 tweet projecting that Tesla would make about 500,000 cars this year.
About 4 hours later, Musk corrected his statement, saying he meant that Tesla had started to manufacture cars at a weekly clip that would translate into 500,000 cars during a yearlong period, but not necessarily for calendar 2019. But those factors evidently didn’t sway the SEC.
In response to Musk’s tweeting, the SEC asked a federal court in New York to hold Musk in contempt for violating a $40 million settlement he begrudgingly reached with the U.S. stock market’s chief regulatory agency five months ago.
Almost immediately the market reacted to the SEC complaint and Tesla stock closed the day with a 5% decrease in value. Musk, in turn, used this situation to once again stress his disrespect to the commission repeatedly mocking the regulators in his Twitter.
The case is likely to lead to a court hearing, in which a judge will consider whether Musk’s tweets breach the terms of the earlier settlement and if it did what punishment should be meted out. The SEC declined to comment on what sort of additional punishment Musk might face.