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Musk Ridicules SEC in Tweet Storm Days After Settling Suit

Oct. 5, 2018
Tesla CEO exposes carmaker to risk of tougher penalties.

Another day, another tweet storm from Elon Musk that has the potential to cause major problems for Tesla Inc.

Musk, with 22.8 million followers on Twitter, went into overdrive with about 15 tweets targeting the Securities and Exchange Commission and short sellers within five hours. Less than a week after settling a lawsuit with the SEC, he mocked the institution by referring to it as the “Shortseller Enrichment Commission” while also calling for short-selling to be outlawed.

He also sarcastically quipped the SEC was doing "incredible work."

The tweets may imperil a deal struck with the SEC on Saturday -- which isn’t final -- that would bar him from serving as chairman of the car-maker for three years as a punishment for problematic tweets he sent about taking Tesla private. As part of the deal, the company also has to implement procedures and controls to oversee Musk’s communications, including his tweets.

In Friday pre-market trading, Tesla shares fell to $274.50 at 10:47 a.m. Paris time. They closed down 4.4% to $281.83 on Thursday in New York.

Representatives for the Palo Alto, California-based company didn’t respond to requests for comment. Ryan White, an SEC spokesman, declined to comment.

The posts may test the boundaries of Musk’s agreement not to deny wrongdoing and risk reviving stiffer forms of punishment. Last week, the SEC sought to prohibit him from serving as an officer of a public company. A federal judge still has to decide whether the penalties levied against the CEO are appropriate.

Musk also dragged BlackRock into his long-running dispute with short sellers, alleging the fund manager was reaping heavy profits by lending shares they hold to this group of investors. Representatives for BlackRock in London weren’t immediately available for comment. The fund manager held about 3.8% stake in Tesla as of the end of June, according to data compiled by Bloomberg.

It all started on Thursday at 4:16 p.m. New York time with a tweet that racked up 22,000 likes and 3,700 re-tweets:

The SEC, whose @SEC_News Twitter handle has about 251,000 followers, is also active on the messaging service but has refrained from posting about Musk or Tesla since last weekend’s settlement.

By Melissa Cheok

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