Elon Musk shows up in court over tweets

By: Nicolas V.

Tesla CEO Elon Musk took the rare move of showing up to a court hearing Thursday over his tweeting, which the Securities and Exchange Commission claims is out of control.

The billionaire tech entrepreneur could be seen pacing in the security line at the downtown Manhattan federal courthouse ahead of a 2 p.m. contempt of court hearing before Judge Alison Nathan.

Lawyers for the SEC are asking Nathan to hold Musk in contempt of court for violating an agreement he hammered out with the watchdog last year — and which the judge approved — to have his Tesla tweets monitored.

Because it’s a civil proceeding, he didn’t need to show.

But the SEC is asking for the judge to drop the hammer on Musk after he tweeted on Feb. 19 that his electric car company expects to produce around 500,000 Model 3 electric vehicles in 2019 — only to update the tweet four hours later to explain that the 500,000 figure was actually an annualized production rate.

The watchdog says Musk’s tweet was a violation of his October agreement to stop “disseminating misleading or inaccurate information via Twitter or other means in the future.”

“Tesla still appears unwilling to exercise any meaningful control over its CEO,” SEC lawyer Cheryl Crumpton told the judge Thursday.

Crumpton also argued that Musk has incorrectly argued he only needs pre-approval if he tweets something that could “move markets.”

“No one is going to know before the published communication whether or not it is going to move markets,” the attorney said.

Under the agreement hashed out last year, Musk was supposed to stop tweeting about Tesla’s business without a lawyer’s approval. But his top lawyer bolted shortly after his Feb. 19 tweet about Tesla’s Model 3 production.

Musk agreed to the deal after the SEC cracked down on him for tweeting last August that he had “funding secured” to take Tesla private at $420 a share. The SEC said the claim was fraudulent and noted that it appeared to be an attempt to impress his then-girlfriend, the pop singer Grimes, with a marijuana joke.

Musk’s lawyers are expected to argue that the SEC is violating Musk’s constitutional right to free speech and that he is a victim of “concerning and unprecedented overreach on the part of the SEC.”

Musk has also lashed out at the watchdog on Twitter, claiming it is “broken” for demanding he be held in “contempt of court” over a second misleading Tesla tweet.

“Something is broken with SEC oversight,” Musk tweeted early Tuesday after the regulatory agency said in a court filing that Musk was in violation of his October promise to rein in his tweets.