By Brendan Pierson
NEWYORK (Reuters) – Tesla Inc Chief Executive Elon Musk and the U.S. Securities and Exchange Commission are seeking more time from a federal court to settle a dispute over Musk’s use of Twitter, according to a court filing Thursday.
A federal judge in Manhattan on April 4 ordered Musk and the agency, which had previously asked to hold Musk in contempt of court for violating an earlier agreement, to try to reach an agreement and report back by April 18. The judge said she would rule on the contempt request if they failed to reach an agreement.
Lawyers for Musk and the SEC said in Thursday’s filing that “discussions are ongoing” and asked for another week, until April 25, to deliver their report.
The SEC sued Musk last year after he tweeted on Aug. 7 that he had “funding secured” to take Tesla private at $420 per share. The agency said the tweet, which sent Tesla’s share price up as much as 13.3 percent, violated securities laws. Musk’s privatisation plan was at best in an early stage and financing was not in place.
Musk settled the lawsuit, agreeing to step down as chairman and have the company’s lawyers pre-approve written communications, including tweets with material information about the company.
In February, the SEC accused Musk of violating that settlement by sending a tweet about Tesla’s production that had not been vetted by the company’s attorneys, and asked U.S. District Judge Alison Nathan in Manhattan to hold him in contempt.
Musk’s lawyers have argued that the tweet did not contain new information that was material to investors, and that Musk did not need pre-approval for all tweets about Tesla under the settlement.
At the April 4 hearing, a lawyer for the SEC said that if Musk were found in contempt, the agency would ask the judge to require him to submit regular reports about his Twitter use, and to pay a series of progressively higher fines for any future violations.
Nathan declined to rule on the contempt motion at the hearing, instead ordering Musk and Tesla to meet and try to resolve the dispute on their own.
(Reporting by Brendan Pierson in New York; Editing by Lisa Shumaker)