Elon Musk’s claims of ‘broken promises’ denied by the SEC

The Security and Exchange Commission (SEC) has responded to Tesla CEO Elon Musk’s claims that the agency has subjected him and his electric car company to “endless, unfounded investigations,” first reported by the Wall Street Journal. In a letter to Judge Alison Nathan, the SEC refutes Musk’s allegations that it’s ignoring its commitment to distribute $40 million in fine money to Tesla shareholders, which Musk and Tesla had paid as part of a 2018 settlement.

“Given the complexity of the distribution, it has taken time to develop the plan of allocation,” SEC official Steve Buchholz writes in the letter. “That process is nearing completion and, barring any unforeseen circumstances, the Distributions staff expects to submit the proposed plan of distribution for the Court’s approval by the end of March 2022.” The SEC also notes that it has complied with the court’s order that requires it to file reports regarding the status of the distribution.

Musk’s complaints were included in a letter that his attorney, Alex Spiro, submitted to the court on his behalf. It concerns a 2018 settlement — also overseen by Judge Nathan — in which the SEC charged Musk for securities fraud after tweeting that he had “funding secured” to make Tesla a private company. Musk later reached a settlement with the SEC, requiring him and Tesla to pay separate $20 million fines. It also ordered Musk to step down as chairman of Tesla for three years and asked that the company supervise any statements Musk makes about Tesla on social media.

In 2019, the SEC accused Musk of being in “blatant violation” of the settlement after he tweeted the automaker would produce around 500,000 cars that year — a number much higher than what Tesla originally forecasted. The SEC asked a federal judge to hold Musk in contempt, a move Musk claimed was an “unconstitutional power grab.” Judge Nathan later ordered the two to work things out on their own.

Earlier this month, we learned the SEC subpoenaed Tesla last November in another episode surrounding Musk’s tweet. In his letter to the court, Musk accuses the SEC of wasting its time subpoenaing Tesla instead of distributing the $40 million to shareholders. The SEC replied by saying the subpoena is unrelated to the current litigation, and that if Tesla and Musk “have legitimate objections with the SEC’s processes” they should use the proper legal avenues to challenge it.