Musk, Tesla council sued over breach of SEC agreement

A Tesla Inc. investor sued CEO Elon Musk and his Delaware board, claiming Musk had exposed the company to billions of potential liability and market losses by continuing to send “volatile” tweets, despite a settlement with regulators that its social pre-approve media activity.

The case, which was announced in the Delaware Chancery Court on Friday, accuses the board of electric vehicle manufacturers of failing to curb Musk’s behavior online, even though it repeatedly made a settlement with the Securities and Exchange Commission in 2018. transgress.

The agreement, which includes payments of $ 20 million each from Musk and Tesla, required the company to adopt strict new oversight procedures related to Musk’s social media posts.

After Musk almost immediately violated the terms of the agreement in 2019, the new compliance rules were tightened, according to the complaint.

But he allegedly “continued to issue tweets without the required pre-approval” while Tesla was buzzed by its own lawyers.

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“Musk’s misconduct” and “the failure of Tesla’s management to ensure compliance” caused the company “significant damage”, including heavy penalties and “billions of dollars lost in market capitalization”, the lawsuit states.

The complaint was originally filed on March 8 under the seal.