Last Tuesday, Tesla CEO Elon Musk tweeted that the company would produce "around 500,00" cars in 2019, a large increase over the goal of 400k vehicles the company previously forecast in January. Musk later corrected himself and said that is meant "annualized production rate at the end of 2019 probably around 500k".
The problem with this tweet is that back in October, Tesla and Musk had entered into a settlement with the SEC that Musk's public statements regarding Tesla production, finances, and other such matters would be reviewed by the company's board of directors before they were posted. The settlement stems from a fraud case where Musk tweeted that "funding has been secured" to take Tesla private, a tweet that later turned out not to be true. Tesla's lawyers acknowledged to the SEC on Friday that the posts in question had not been reviewed.
Yesterday, the SEC filed a motion with the Federal District Court in Manhattan that claims Musk had "violated the court’s final judgment by engaging in the very conduct that the preapproval provision of the final judgment was designed to prevent.". Further, the tweet had gone out to 24 million followers.
Musk argues that the substance of his tweets had already been vetted, approved, and publicly disseminated. The defense comes from Telsa's earning report which had a forecast production of between 350,000 to 500,000 cars.
The federal judge has a range of options from imposing a fine, impose restrictions on Musk's use of Twitter, or even set up for a later removal of Musk as CEO.
Tesla stock dropped about 3% in the hour directly after the motion was filed.