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Elon Musk says ‘something is broken’ at the SEC

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Just hours after the US’ top stock market regulator asked a federal judge to hold him in contempt, Tesla CEO Elon Musk tweeted that ‘something is broken’ with the Securities and Exchange Commission.

“This has now happened several times,” he tweeted at 4:25 AM local time Tuesday. “Something is broken with SEC oversight.”

The SEC said Monday that Musk had misled investors by tweeting about Tesla’s expected 2019 production targets. The agency alleges it was in violation of the terms of a settlement he and the SEC reached last fall, and it asked a judge to hold him in contempt of the federal court that approved that settlement.

Shortly after saying the company would make 500,000 cars this year last week, Musk almost immediately backtracked with corrected numbers. Bloomberg News reported Monday that the company’s designated securities counsel drafted the follow-up response after seeing Musk’s first tweet.

“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 said in a filing with the US District Court for the Southern District of New York. “Musk has thus violated the court’s final judgment by engaging in the very conduct that the pre-approval provision of the final judgment was designed to prevent.”

A Tesla spokesperson declined to comment on the SEC filing Monday.

“SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing …,” Musk tweeted Monday evening in response to the SEC’s filing.

“I have great respect for judges. It’s not perfect, but, in general, we should be very glad of the US justice system,” he added.

Shares of Tesla opened down about 2.9% on Tuesday, near $290. The stock is likely to keep heading down, too, Wall Street analysts said Tuesday.

“Regardless of the outcome of this new legal headache for both Elon Musk and Tesla,” Jeff Osborne, an analyst at Cowen, told clients. “We view it as a negative distraction for a company that needs to execute at this critical juncture.”

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