Tesla shares slide after the SEC asks judge to hold Elon Musk in contempt over tweet
The regulator didn't specifically state what penalty it wanted the court to impose on Musk
Tesla shares dropped in premarket trading on Tuesday after the US Securities and Exchange Commission (SEC) asked a judge to hold the company's CEO Elon Musk in contempt over a tweet posted on 19th February about company's estimated vehicle production.
On Monday, the market watchdog had filed a claim against Musk, accusing him of acting against the agreement that was reached with the regulatory agency last year.
Before the SEC filing on Monday, the company's stocks were up $4.06 a share, at $298.77.
On Tuesday, stocks dropped more than 3 per cent in the premarket, according to CNBC.
On 19th February, Musk tweed: "Tesla made 0 cars in 2011, but will make around 500k in 2019."
But, four hours later, he clarified that he meant to say that Tesla's annualised production rate at the end of year could be around 500,000 vehicles. He revealed that total vehicle deliveries for 2019 are still estimated at 400,000.
Interestingly, Tesla's general counsel Dane Butswinkas, resigned on 20th February - a day after Musk made the tweet. Tesla had hired Butswinkas to help settle the case with the SEC. He was replaced by former vice president of legal Jonathan Chang.
Last year, Musk resigned from Tesla's chairman post after the SEC filed a civil lawsuit accusing Musk of misleading people. He was slapped with a fine of US$20 million.
Later, the SEC and Musk arrived at an agreement, wherein Musk was to seek pre-approval from the SEC before posting any written communication containing information material to Tesla or its shareholders.
"Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people," the SEC wrote in the court filing on Monday.
The regulator didn't specifically state what penalty it wanted the court to impose on Musk.
Responding to the SEC decision, the Tesla founder tweeted: "SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing ..."
"Indeed. I have great respect for judges. It's not perfect, but, in general, we should be very glad of the US justice system," Silicon Valley billionaire said in another tweet.
"Something is broken with SEC oversight," he said in a tweet on Tuesday morning.
Thirteen of 32 Wall Street brokerages now view Tesla shares a "buy" or higher. Eight rate it as a "hold" and 11 "sell" or lower.