A federal judge in New York will hear oral arguments next week in a lawsuit brought by the US Securities and Exchange Commission that seeks to hold Tesla CEO Elon Musk in contempt for violating a settlement deal.
Musk, who was present for Thursday’s hearing, told reporters afterward that he was “very impressed” with the judge.
Judge Alison Nathan on Tuesday set a hearing for April 4. It is unclear when she will issue a ruling.
If Nathan ultimately sides with regulators and holds Musk in contempt, he could face another hefty fine and further limits to his social media use. The judge could oust Musk from the CEO seat, although she is not expected to rule that harshly. Nathan could also toss out the settlement with the SEC, effectively reopening the agency’s litigation against Musk and Tesla.
The SEC claims Musk violated their 2018 settlement deal when he said in a February 19 tweet that Tesla will make 500,000 total cars in 2019. But hours later, he clarified that Tesla hoped to reach a 500,000 car-per-year production rate by the end of 2019 and deliver 400,000 cars this year.
Tesla had agreed to establish a board committee to oversee Musk’s posts. In a court filing, Tesla conceded Musk did not receive pre-approval from anyone on that committee for his February posts, but the company has since claimed that he didn’t need it.
Musk’s standoff with the SEC started last year when he claimed in a tweet that he was “considering” taking Tesla private at $420 a share and that he had secured funding for the deal. That sent Tesla’s stock surging.
But the SEC later said funding was not, in fact, secured, and the agency accused him in a lawsuit of misleading investors. Musk initially signaled that he would fight the agency, but weeks later regulators announced that he and Tesla had agreed to settlement deals that saddled them with $40 million in fines and required Musk to step down as the company’s chairman. He retained the role of CEO.