Every day, a new verbal attack followed by a counter-attack from the other side. None of the protagonists seems to want to lower the temperature.
And things don’t seem to be getting better, on the contrary.
The standoff between Elon Musk and the Securities and Exchange Commission (SEC) is reaching levels of no return.
Tesla’s (TSLA) – Get Tesla Inc Report CEO accuses the SEC of leaking information to harm him. In a letter addressed to the New York judge Alison Nathan on Monday by his lawyer, the richest man in the world alleges that these leaks, which intervene within the framework of an investigation by the federal agency on Tesla, are reprisals following recent criticisms that he made against the SEC.
“Upon information and belief, after I filed the February 17, 2022 letter to this Court regarding the Commission’s conduct, at least one member of the SEC staff responded by leaking certain information regarding its investigation,” wrote Alex Shapiro, Alex Spiro, one of Musk’s lawyers. “This leak is emblematic of the vindictive, improper conduct that occasioned my letter: the SEC is retaliating against Mr. Musk and Tesla, without answering to the constraints of principle or law in so doing.”
Tesla Addressed Its Complaints to the SEC Office of Inspector General
Spiro did not name the SEC “staff” who allegedly leaked information about Musk. It also did not say what information it is. However, the lawyer indicates that he referred the matter to “the SEC Office of Inspector General.”
He added that: “No denial has been forthcoming as of yet. So that the Court is advised of the premises and able to address the ostensible misconduct before it, we now respectfully seek on-the-record assurance that the Commission has not leaked investigative details in violation of its own rules and policies, and is otherwise acting in accordance with the law.”
What led the whimsical and charismatic CEO to launch such accusations and especially to throw oil on the fire of an already unprecedented situation?
On February 17, Musk reignited hostilities with the SEC, with whom he had already crumbled in the summer of 2018 over what would become the TweetGate affair. His lawyer, Alex Spiro, accused the SEC of targeting both him and the clean-energy carmaker in an ‘unrelenting’ investigation aimed at limiting his right to free speech.
Musk also said that the SEC had neglected their duties to remit $40 million to shareholders that Tesla and Musk previously paid in fines to settle securities fraud charges.
The SEC, through its attorney, responded the next day to Musk. Steven Buchholz, the SEC attorney, said the agency was actually making progress on the task of disbursing the $40 million to shareholders.
“We note that Mr. Spiro’s letter is the first time we have seen Tesla and Mr. Musk express any concerns regarding the distribution of the penalties Mr. Musk and Tesla paid to settle this litigation,” Buchholz wrote in a letter to Judge Nathan on Friday.
Adding: “Barring any unforeseen circumstances, the Distributions staff expects to submit the proposed plan of distribution for the Court’s approval by the end of March 2022.”
A Tweet That Does Not Want to Disappear
The Tweetgate affair started on Aug. 7, 2018, with this post by Musk on his Twitter account: “Am considering taking Tesla private at $420. Funding secured.”
The tweet shook Tesla stock. The SEC filed a complaint against Musk.
A settlement was reached and announced on Sept. 29, 2018. It required Musk to step down as Tesla’s chairman. Tesla and Musk agreed to pay $40 million in penalties. Tesla also agreed to have the company’s lawyers preapprove tweets with material information about the company.
Two new independent directors were appointed.
But Tesla disclosed, on February 7, in a regulatory filing, that It has received a subpoena from the SEC in November, requesting information related to the settlement, which mandated that the company vet Elon Musk’s tweets on information that could weigh on the stock.
“The SEC had issued subpoenas to Tesla in connection with Elon Musk’s prior statement that he was considering taking Tesla private. The take-private investigation was resolved and closed with a settlement entered into with the SEC in September 2018 and as further clarified in April 2019 in an amendment,” the company said.