Shares of Tesla (NASDAQ:TSLA) were foreseen lower in early trading Tuesday after the U.S. Securities and Exchange Commission asked a judge to hold Elon Musk in contempt for violating its deal. The SEC cited an "inaccurate" February 19 tweet about production, Bloomberg first reported.
It was on Feb. 19 that Musk tweeted — then revised — projections for full-year Tesla manufacturing numbers.
The CEO said that Tesla would make "around" 500,000 vehicles this year, clarifying about four hours later that he "meant to say" the company's annualized production rate at the end of 2019 could be around 500,000 vehicles — or a production rate of 10,000 cars per week.
Total deliveries for the year are still estimated at 400,000, Musk said.
The next day, Tesla's general counsel left his post.
"Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people," the SEC wrote in the court filing.
The Tesla chief responded to the SEC decision hours later, tweeting: "SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing ..."
The commission had settled charges with Musk and Tesla over the CEO's aborted bid to take the company private last fall, with the billionaire remaining at the helm of the company but relinquishing his chairman title and getting slapped with a $20-million fine. As part of the settlement, Musk was supposed to get pre-approval for future tweets.
However, the SEC writes, "in response to the SEC's February 20 request for information, Musk and Tesla state that, since Tesla's Policy was implemented in December 2018, Musk's tweets have been reviewed after their publication, but there is no suggestion that Musk has sought or obtained pre-approval of any tweet prior to publishing it."
Shares dropped sharply, $6.46, or 2.2%, to $292.31, in Tuesday’s first hour.
