What’s one of Elon Musk’s most infamous habits – tweeting out updates and thoughts on his businesses before they’re publicly announced – now under scrutiny from the SEC? In an interview with The Wall Street Journal, the CEO and founder of Tesla, SpaceX, and Neuralink said that he wants to end the practice of pre-approval for his tweets.
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Tesla CEO Elon Musk Calls SEC Mandate
“Government-imposed muzzle”
Tesla CEO Elon Musk has called the SEC mandate that he obtain pre-approval for all of his tweets a “government-imposed muzzle.” In an email to employees obtained by The Verge, Musk said:
“The recent SEC mandate that I seek pre-approval for all tweets is something that is wholly unacceptable and unnecessary. This is a terrible precedent and a major restraint of freedom of speech. I am fighting back.”
Musk’s concern about the mandate is not without merit. The SEC has previously used its authority to bring charges against individuals for social media posts. For example, in May 2018, the SEC charged Marketo CEO Jay Clayton with false statements and making unlawful offers for securities because he made public statements about his company’s plans to hire additional employees even after being warned by the SEC not to do so.
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Tweets on Tesla, SpaceX and SolarCity Are Covered by SEC Rule
Elon Musk, the founder and CEO of Tesla Motors, SpaceX, and SolarCity, is seeking to end pre-approval of his tweets. He contends that the SEC’s rule mandating pre-approval of tweets is government-imposed muzzle.
The SEC’s rule on preapproval of tweets was adopted in December 2013 in light of the popularity of Twitter at the time. The rule requires companies issuing securities to submit a written disclosure statement for each tweet containing information about the company, its business, and its financial prospects.
Musk believes that this rule is excessively burdensome, and has proposed a resolution at Tesla’s annual meeting that would repeal the rule. If passed, it would be Tesla’s first resolution since becoming a public company in 2010.
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There are a number of arguments made in favor of repealing the rule. First, it is argued that companies should have more flexibility to communicate with their shareholders via social media. Second, it is argued that the requirement imposes an unnecessary burden on issuers, who are already required to submit extensive disclosure documents for other types of filings.
However, opponents of repealing the rule argue that it is necessary to ensure accuracy and completeness of disclosure statements. They also contend
SEC Charges Tesla, Musk With Fraud and Mismanagement
Elon Musk, the founder and CEO of Tesla, announced on Twitter that he wants to end pre-approval of his tweets. He called the SEC mandate “government-imposed muzzle.”
The SEC charged Tesla and Musk with fraud and mismanagement. They allege that Tesla misled investors by not disclosing financial risks associated with manufacturing its Model 3 sedan. Musk has also been accused of false statements about taking the company private.
Musk’s tweets have become a source of controversy. He has been fined multiple times for violating SEC regulations. He has also been sued by two former employees.
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Critics argue that Musk’s tweets could lead to investor panic. Others say that his tweets provide valuable insight about Tesla’s business.
The Future of Social Media: Elon Musk’s Quest to End Pre-Approval
The saga of Elon Musk and his tweets continues. The Tesla and SpaceX CEO has been receiving backlash from the public and the SEC for his tweets regarding taking Tesla private and investing in Boring Company, among other things.
In a blog post earlier this week, Musk outlined his plan to end pre-approval of his tweets. He argued that this mandate is government-imposed muzzle and not something that should be in place.
This issue has been in the news lately due to Musk’s tweet about taking Tesla private. This created a lot of speculation and caused the stock price to drop. The SEC is investigating this tweet, among others.
Musk has said in the past that he tweets without thinking about the consequences first. He argues that he should be able to express himself freely without prior approval from the SEC. Critics say that this type of behavior could lead to financial ruin for him and others if something goes wrong with his businesses.
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