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U.S. Regulator : Elon Musk Fully Ignored Key Term Of Settlement

Attorneys for the Securities and Exchange Commission on Monday blasted Tesla Inc. (TSLA) Chief Executive Elon Musk's defense over whether he should be held in contempt of court, calling one of his main arguments "ridiculous."

Last week, Musk said the SEC was overreaching and infringing on his free speech by seeking a contempt ruling over tweets he sent on February 19. "Tesla made 0 cars in 2011, but will make around 500k in 2019," Musk tweeted, before clarifying a few hours later: "Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k."

The SEC claimed that violated an agreement from last fall, when Musk settled an SEC fraud investigation over another tweet. As part of that deal, Musk agreed that Tesla would have oversight and pre-approval over his tweets that are material to the company. He also agreed to pay a $20 million fine — Tesla was also fined $20 million — and gave up his seat as Tesla chairman.

Musk admitted he had not sought pre-approval for the Feb. 19 tweet. Or apparently any others.

In a court filing Monday, the SEC said it was "stunning" to learn that "Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the court-ordered pre-approval policy went into effect."

"Musk reads this court's order as not requiring pre-approval unless Musk himself unilaterally decides his planned tweets are material," the SEC said, arguing that Musk's actions make the court order "meaningless."

In the filing, the SEC dismissed every aspect of Musk's defense, saying his explanations for the Feb. 19 tweet have changed over time, and ripped his argument that the tweet was not material.

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