Elon Musk is again facing legal issues due to his tweets. Both Bloomberg and TechCrunch reports that investor Chase Gharrity has sued Musk and Tesla for allegedly violating the terms of an SEC agreement regarding the CEO’s tweets. Musk continues to send unsolicited, “volatile” tweets that open the company billions of dollars in potential losses and fines, Gharrity said. The investor also claims that Tesla did not seek general advice that could provide advice “uninfected by Musk.”
The most important example was 1 May 2020 tweet in which Musk claims that Tesla’s share price is “too high.” The post dropped Tesla’s inventory by 12 percent in just 30 minutes, and Musk said it was not a joke and was not pre-screened either.
Musk’s first tweet-related SEC confrontation took place in August 2018 when he spoke about Tesla going private. He reached a settlement with the SEC later that year, only to wrestle with the regulator again in 2019 over claims for EV production. An amended agreement from April 2019 requires Musk to obtain prior approval from a security attorney before tweeting anything related to important events and financial data.
Tesla did not comment on the lawsuit and its PR team is believed to be dissolved.
There are no guarantees for the lawsuit. If that happens, it could have significant consequences for Musk and Tesla. While the court cannot impose regulatory consequences like the SEC, it can impose fines and otherwise put pressure on Tesla to curb Musk’s Twitter habits.