Musk Ridicules SEC in Tweet Storm Days After Settling Suit

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A federal judge on Thursday gave Tesla Inc Chief Executive Elon Musk and the U.S. Securities and Exchange Commission one week to justify their settlement to resolve securities fraud charges against the head of the electric auto company.

Several Twitter users also criticized Musk, who has over 20 million followers on the social media platform, for his tweets targeting regulators and short sellers.

While some investors then came forward and confirmed that meetings had taken place in which Musk had raised the possibility of taking Tesla private, the message also caught the attention of SEC, which demanded an explanation.

Shares of Tesla closed down 4.4% at $281.83, and fell another 2.2% after market hours following Musk's tweet.

The Wall Street consensus for Tesla shares has fallen to $291, from above $300, in recent weeks, amid the fallout from the Securities and Exchange Commission's lawsuit against Musk and its subsequent settlement. But that doesn't mean Tesla's board can't order Musk to tone done his Twitter act in the best interests of the company.

Another Tesla bull, Gerber Kawasaki CEO Ross Gerber, was more blunt in expressing his disapproval of Musk's post. "But just for SEC enforcement action, particularly with a big fine, it's unusual", Jay Hulings said.

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The settlement hit a bump in the road on Thursday after the federal judge on the case ordered Musk and the organisation to justify the agreement as "fair and reasonable". The commission seeks a permanent injunction, disgorgement, civil penalties and to prohibit Musk from serving as an officer or director of a public company.

Tesla and Musk's deal with the SEC would allow Musk to stay on as CEO of Tesla (TSLA) and does not require that he admit wrongdoing.

Tesla and the SEC declined requests for comment. "Granted it has only been three days, but it may have been sensible to ask him not to tweet anything related to the company until they had an opportunity to put in the policies, procedures and controls required by the settlement".

Two days later, the agency announced that Musk agreed to a settlement deal that would force him to step down as Tesla's chairman and pay a $20 million fine.

But, after seeing the consequences of it, I think he must be careful about his tweets.

Following a weird August 16 interview with The New York Times, Musk's actions were under scrutiny again last month after he appeared to smoke marijuana and drink whiskey during comedian Joe Rogan 's podcast. "It also bolsters the SEC argument that the motive for the false and misleading tweets about taking the company private was to thwart the short sellers".