Tesla CEO Elon Musk tweeted Friday that the company’s stock price was “too high” in his opinion, immediately sending shares into a free fall and in possible violation of an agreement reached with the U.S. Securities and Exchange Commission last year.
Tesla shares fell nearly 12% in the half hour following his stock price tweets — just one of many sent out in rapid fire that covered everything from demands to “give people back their freedom” and lines from the U.S. National Anthem to quotes from poet Dylan Thomas and a claim that he will sell all of his possessions.
The SEC declined to comment on whether this was a violation of a settlement agreement. Tesla did not respond to a request for comment. Musk did tell the Wall Street Journal in an email that he was not joking and that his tweets were not vetted in advance, a condition in the prior agreement reached with the SEC.
Musk’s tweet comes almost exactly a year after he reached a settlement agreement with the U.S. Securities and Exchange Commission that gave the CEO freedom to use Twitter —within certain limitations — without fear of being held in contempt for violating an earlier court order.
Under that agreement, Musk can tweet as he wishes except when it’s about certain events or financial milestones. In those cases, Musk must seek pre-approval from a securities lawyer, according to the agreement filed in April 2019 with Manhattan federal court.
Musk is supposed to seek pre-approval if his tweets include events regarding the company’s securities, including his acquisition or disposition of shares, nonpublic legal or regulatory findings or decisions.
He’s also supposed to get pre-approval on any tweets about the company’s financial condition or guidance, potential or proposed mergers, acquisitions or joint ventures, sales or delivery numbers, new or proposed business lines or any event requiring the filing of a Form 8-K such as a change in control or a change in the company’s directors.