SEC makes a fairly compelling argument that Musk himself provides the evidence that he always intended to vacillate with the process and have probably been preparing this enforcement action since the CBS interview aired, confident that he would soon make it easy for them. His ego-stroking games can easily cost $420 millions and/or disbarment as CEO and/or 6 month cage-rest in jail this time, ironically feeding the shorts more than the SEC could ever do ... but I suppose some people can only learn the hard way to cut out the BS:
[extract from p.14 of
SEC's motion for order to show cause]
Musk has not made a diligent or good faith effort to comply with the provision of the Court’s Final Judgment requiring pre-approval of his written communications about Tesla. Less than two months after the Court entered its Final Judgment, Musk publicly indicated that he was not serious about compliance with this provision. On December 9, 2018, the CBS television program 60 Minutes aired an interview of Musk by Lesley Stahl that had taken place the previous week.
Tesla CEO Elon Musk: The 60 Minutes Interview (Dec. 9, 2018).
During the interview, Stahl asked Musk about Tesla’s oversight of his tweets after his settlement with the SEC:
Lesley Stahl
: Have you had any of your tweets censored since the settlement?
Elon Musk
: No.
Lesley Stahl
: None? Does someone have to read them before they go out?
Elon Musk
: No.
Lesley Stahl
: So your tweets are not supervised?
Elon Musk
: The only tweets that would have to be say reviewed would be if a tweet had a probability of causing a movement in the stock.
Lesley Stahl
: And that’s it?
Elon Musk
: Yeah, I mean otherwise it’s, “Hello, First Amendment.” Like Freedom of Speech is fundamental.
Lesley Stahl
: But how do they know if it’s going to move the market if they’re not reading all of them before you send them?
Elon Musk
: Well, I guess we might make some mistakes. Who knows?
Lesley Stahl
: Are you serious?
Elon Musk
: Nobody’s perfect.
Lesley Stahl
: Look at you.
Elon Musk
: I want to be clear. I do not respect the SEC. I do not respect them.
Lesley Stahl
: But you're abiding by the settlement, aren’t you?
Elon Musk
: Because I respect the justice system.
Id. (emphasis added).
At the time of this interview, Tesla had not yet implemented its Court-mandated procedures governing oversight of Musk’s tweets about Tesla. But before the Policy even took effect, Musk’s statements in the interview, “I guess we might make some mistakes,” and “Nobody’s perfect,” support the view that he did not intend to diligently attempt to comply with the Policy or, in turn, the Court’s Final Judgment. In fact, in response to the SEC’s February 20 request for information, Musk andTesla state that, since Tesla’s Policy was implemented in December 2018, Musk’s tweets have been reviewed after their publication, but there is no suggestion that Musk has sought or obtained pre-approval of any tweet prior to publishing it.
See Exhibit 4, at 2 (providing examples of written communications that have been pre-approved that do not include any of Musk’s tweets; noting that Designated Securities Counsel has reviewed “past written communications.”). While Musk claims to “respect the justice system,” his deliberate indifference to compliance with this Court’s Final Judgment indicates otherwise.
