Update: This story has been updated to include a ruling from a U.S. district judge giving Elon Musk until March 11 to explain why he shouldn't be held in contempt.
On Monday, the SEC asked a federal judge to hold the Tesla founder in contempt, alleging he broke a settlement deal they reached last year, Bloomberg first reported. Under the terms of the SEC agreement, Musk is required to seek prior approval from company officials before sending any written communication, including social media posts, which contain "information material to Tesla or its shareholders." Musk sent two tweets on February 19 that mentioned Tesla's vehicle production rates. One said Tesla "will make around 500k [cars] in 2019," and the second one, published hours later, clarified that number referred to an "annualized production rate" and that "deliveries for year still estimated to be about 400k." The first tweet was sent without preapproval, which caused the SEC to file its motion. Musk, however, seems to believe the agency is overreaching-- and U.S. District Judge Alison Nathan has reportedly given him until March 11 to explain why he shouldn't be held in contempt.
"SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing," the entrepreneur tweeted Monday in response to media reports. He doubled down on his criticism Tuesday morning, replying to a user's tweet alleging Musk's post did not move the markets but that the SEC's filing did. "Something is broken with SEC oversight," Musk tweeted.
Musk first got in trouble with the SEC after tweeting last year he had "funding secured" to take Tesla private at $420 per share. He later reached a settlement with the SEC, agreeing to step down from Tesla's chairman role for the next three years and paying a $20 million fine.
New York Law School professor Rebecca Roiphe told The New York Times that the SEC's motion "is a fairly extreme step, but it is unsurprising, given that Musk seems so unconcerned not only about the agreement but about the policies behind the securities law." Now it's up to a federal judge to weigh in on the matter.