Elon Musk is once again back in the news for his erratic tweets on the company’s financial performance, as a Tesla investor has sued him and the board of the company for violating a settlement with the US Securities and Exchange Commission (SEC) that barred Musk from tweeting on the sensitive financial information related to the electric car maker.
The lawsuit claims that Musk is exposing Tesla to potential penalties from regulators and could drive down its stock.
Musk’s “erratic” actions have caused the company “substantial damage”, including billions of dollars in lost market capitalisation, reports TechCrunch, citing the lawsuit.
Tesla did not comment on the lawsuit.
Despite reaching a settlement with the US SEC in April 2019 after weeks of negotiation over his controversial Twitter activities, Musk had agreed to more specific oversight on his tweets about the company.
This latest lawsuit alleged that Musk’s tweeting violates the April 2019 settlement.
The lawsuit cited several tweets sent from Musk’s account, including a tweet on May 1, 2020 which said: “Tesla stock is too high IMO.”
The tweet sent Tesla shares into a free fall — nearly 12 per cent.
The latest lawsuit alleged that the Tesla board has also failed to secure a general counsel “who can provide advice untainted by Musk”.
According to the settlement reached in 2019, all tweets from Musk about Tesla’s financial health, sales or delivery numbers were to be pre-approved by a company lawyer.
His notorious tweet in August 2018 when he posted about Tesla “going private, funding secured” at $420 a share, cost him his role as Tesla Chairman.
The tweet resulted in Musk and Tesla reaching a settlement of fraud charges with the SEC.
The settlement included $40 million in penalties, split equally between the company and Musk, and the removal of Musk as chairman of the Tesla board.