Lawyers for Tesla Inc. Chief Executive Elon Musk have accused the U.S. Securities and Exchange Commission of going “beyond the pale” to “try to muzzle and harass” Musk and the electric-vehicle maker.
The allegations are in a letter filed Thursday to U.S. District Judge Allison Nathan, who presided over the SEC settlement after Musk’s famous “going private” tweet in 2018.
Musk and Tesla
are requesting a “course correction” for an SEC “gone rogue” with investigations and not distributing to shareholders the $40 million in settlement fines as agreed, the letter said.
Tesla shareholders “continue to wait.”
The SEC did not immediately return a request for comment.
“Worst of all, the SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government,” continued the letter. The SEC’s “outsized efforts seem calculated to chill his exercise of First Amendment rights rather than to enforce generally applicable laws in evenhanded fashion.”
In a now famous tweet in August 2018, Musk told his millions of followers he had “funding secured” to take Tesla private for $420 a share, then a substantial premium to the stock’s trading price.
Musk and Tesla settled with the SEC in late September of that year, with Musk agreeing to step down as Tesla’s board chairman, Tesla agreeing to appoint independent board directors, and other requirements, including the monitoring of Musk’s Twitter accounts.
Musk and Tesla agreed to settle the charges against them without admitting to nor denying the SEC’s fraud allegations.
Thursday’s letter also comes a few weeks after Tesla disclosed that it has been subpoenaed by the SEC to see if the electric vehicle maker is in compliance with the settlement.
Musk moved Tesla’s headquarters to Texas last year, saying it was difficult to “scale” in California. Musk and state and local authorities tussled over mandatory factory shutdowns early in the pandemic.
Earlier Thursday, U.S. highway-safety authorities said they opened an investigation into the so-called “phantom braking” involving Tesla Model 3s and Model Ys reacting seemingly out of the blue to imaginary road hazards.
Shares of Tesla have lost more than 15% so far this year and are holding on to gains of around 12% in the past 12 months. That contrasts with an advance of around 13% for the S&P 500 index
in the past 12 months and the index’s losses of about 7% for the year.