Elon Musk Seeks to Terminate Tweet-Fueled Fraud Settlement With SEC "The SEC's pursuit of Mr. Musk has crossed the line into harassment, which is quintessential bad faith," his lawyers wrote.
By Amanda Breen Edited by Jessica Thomas
Our biggest sale — Get unlimited access to Entrepreneur.com at an unbeatable price. Use code SAVE50 at checkout.*
Claim Offer*Offer only available to new subscribers
On Tuesday, Tesla CEO Elon Musk asked a federal judge to terminate his 2018 settlement with the Securities and Exchange Commission (SEC), Reuters reports.
In August of 2018, the SEC sued Musk after he tweeted that he had "funding secured" to potentially take Tesla private at $420 per share. The settlement that followed included a $20 million fine for Tesla and a $20 million personal fine for Musk — both of which were to be distributed to shareholders for a total $40 million payout. Additionally, Musk was hit with a so-called "consent order," which requires a Tesla lawyer to review his tweets before they're posted to Twitter.
But Musk says the SEC never delivered on its promise, so he's ready to stop upholding his end of the bargain. Musk's lawyers have also asked U.S. District Judge Alison Nathan to block the SEC's subpoena requesting records of pre-approval of his November Twitter poll regarding the potential sale of Tesla shares, writing that "The SEC's pursuit of Mr. Musk has crossed the line into harassment, which is quintessential bad faith."
In the November Twitter poll, Musk announced that he would sell 10% of his Tesla stake if the majority approved — which it did. The price of Tesla stock dipped, and Musk has since sold $16.4 billion worth of shares. The electric-car company said on Tuesday that the Twitter activity in question "is behavior the SEC should encourage: a CEO's transparency with the public and shareholders about a proposed stock sale."
Related: Elon Musk Sells $5 Billion in Tesla Stock
Judge Nathan said in an order on Tuesday that the SEC must respond to Musk's request by March 22, and later that day, the SEC filed a distribution plan to pay Tesla shareholders.
Tesla Inc. was down 4.29% as of 11:18 a.m. EST.
