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Why the SEC is warning Elon Musk about his tweets

Elon Musk has once again been warned by federal regulators to use caution in his tweets about Tesla The Securities and Exchange Commission on Tuesday filed papers in Manhattan federal court on Tuesday that noted that the Tesla CEO was bound by a 2018 agreement to receive permission in advance if he wished to tweet certain posts. The SEC also rejected what it called Musk’s “substantively meritless” motion to quash a subpoena requesting records concerning his Twitter poll last November over whether to sell some of his Tesla stock. A lawyer for Musk did not immediately respond to a request for comment. Tesla said that this past November, the SEC sought “information on our governance processes around compliance” with a September 2018 settlement between the company and the regulatory agency. The subpoena was issued just 10 days after Musk triggered a stock sell-off when he asked his Twitter followers if he should sell 10% of his stake in the company. Tesla’s stock price dipped by some 16% over the course of the two days of trading which followed the tweet. Earlier this year, The Post exclusively revealed that Musk insisted his tweet about a 2018 buyout of Tesla was “entirely truthful.” In a filing in the US District of Northern California, Musk laid out his version of events leading to his Aug. 7, 2018, tweet that sparked a firestorm on social media — and a rap on the knuckles from federal regulators. “Am considering taking Tesla private at $420. Funding secured,” Musk tweeted that day. Tesla is being sued in federal court by shareholders who allege that Musk’s tweet cost them billions of dollars in losses. The SEC and Tesla both declined to comment. Shares of Tesla were trading slightly below its opening stock price Monday morning. The number “420” is code for smoking marijuana. As part of the settlement between Tesla and the SEC, Musk agreed to step down as chairman and to appoint independent members to the company’s board of directors. He also agreed to pay $20 million while the company kicked in another $20 million in fines. The SEC said Musk agreed to “establish a new committee of independent directors and put in place additional controls and procedures to oversee [his] communications.” But Musk’s Twitter habit nearly landed him in hot water with the SEC again. The next year, the agency asked a judge to hold Musk in contempt after tweeting about Tesla’s production outlook without getting permission. Musk and the SEC then agreed to amend their prior settlement by adding topics that the CEO is banned from tweeting about.

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