After Tesla CEO Elon Musk alleged ‘unrelenting investigation,’ SEC pushes back

Elon Musk, chief executive officer of Tesla Inc., speaks to members of the media while departing from federal court in New York, U.S., on Thursday, April 4, 2019.

The SEC sent a letter to a federal judge on Friday, responding to allegations by Musk that the agency had broken promises and engaged in a pattern of conduct.

The SEC charged Musk with making false and misleading statements to investors after he announced via social media that he had secured funding to take the company private. The deal that Musk said he was working on never materialized, as the stock went into a period of unusual volatility.

The revised settlement agreement was struck in 2019.

As part of the deal, Musk had to give up his role as chairman of the board and pay a $20 million fine. The company had to pay a fine. Musk and his company agreed that the content of his social media posts would be approved by a securities law expert before they were published.

The $40 million they paid was supposed to go to the shareholders.

Alex Spiro wrote a letter on behalf of Musk and the company to the court, suggesting that the SEC had ignored their duty to give the money to the company's shareholders.

The agency was making progress on that task, which was fairly complex, according to the SEC's Stephen Buchholz. The SEC staff expects to submit a plan of distribution to the court by the end of March 2022.

Spiro suggested that the SEC was too busy investigating and issuing more subpoenas to focus on remittance. The SEC seems to be targeting Mr. Musk because he is an outspoken critic of the government.

Musk's battles with regulators are often messy and public. In October of last year, the CEO called the SEC a "shortseller enrichment commission" and in July of 2020 he did the same.

Spiro suggested that the SEC was trying to chill Musk's First Amendment rights.

In a recent financial filing for the fourth-quarter of 2021, it was revealed that it had received a subpoena from the SEC. The SEC subpoenaed us on November 16, 2021, for information on our governance processes around compliance with the SEC settlement.

Friday's SEC letter to the court argued that the SEC had the right to issue subpoenas to any company it wanted, even if they weren't following proper procedures to challenge them.