Elon Musk now has a specific set of rules about what he can’t tweet without first getting permission from a company attorney.
The Tesla CEO and the Securities and Exchange Commission reached a deal last October saying he needed to get prior approval from a securities lawyer to tweet any information “material to the company” that could move its stock.
Musk’s behavior since that settlement indicated he wouldn’t be reined in by the deal. His lawyers argued the terms of the agreement were ambiguous.
After asking a judge to hold the Tesla CEO in contempt, the SEC and Musk struck a new deal late last week that lays out in more detail what kind of written statements, including those on social media, he must get approved before posting. The deal was approved Tuesday.
Here is what Musk can’t tweet about without a Tesla lawyer’s permission:
1. The company’s financial condition, statements, or results, including earnings or guidance
Musk has tweeted many times about the company’s financial condition, including a rather bizarre April Fool’s joke about the company filing for bankruptcy.
More serious tweets about the company’s financial condition included a tweet explaining that the company couldn’t make the long-promised $35,000 version of the Model 3 because Tesla would “lose money & die.” He said it was crucial to increase revenue by making the more expensive versions of that car first.
2. Potential or proposed mergers, acquisitions, dispositions, tender offers or joint ventures
This is the type of tweet that got him in trouble with the SEC in the first place. In August of 2018 he tweeted that he had “funding secured” to take the company private at $420 a share.
3. Production numbers or sales or delivery numbers (whether actual, forecasted or projected) that have not been previously published via pre-approved written communications by the company….or deviate from previously published official company guidance
Musk’s most recent troubles with SEC arose from a tweet about production numbers.
In February he tweeted that Tesla would make 500,000 cars in 2019. After company attorneys talked to him about that tweet, he corrected it. He clarified the company would be making 500,000 cars annually by the end of the year and that deliveries in 2019 would be about 400,000. But the original Twitter post prompted the SEC to sue Musk for contempt.
4. New or proposed business lines that are unrelated to then-existing business lines (presently included vehicles, transportation and sustainable energy products
This is an area where Musk often muses on Twitter about his next big idea, often in response to tweets that fans of the company send to him.
In November of last year, one fan suggested that it was a shame the company wasn’t planning an electric commercial van. Musk suggested he would look into a deal with Daimler to make an electric version of its Sprinter van.
When someone else suggested that Tesla should just make its own electric Sprinter van, he responded “OK,” before subsequently suggesting that the company had a lot of other higher priorities.
5. Projection, forecast, or estimate numbers regarding the company’s business that have not been previously published in official guidance
This is similar to the first rule banning tweets about the company’s financial conditions. But Musk sometimes used Twitter to give guidance before conference calls with investors or through more traditional channels.
For example, in an April 13, 2018 tweet, he announced the company would be profitable and cash-flow positive in the second half of the year. It came a few weeks before he disclosed the same guidance in the first-quarter earnings report and investor conference call.
6. Events regarding the company’s securities (including Musk’s acquisitions or disposition of the company’s securities) credit facilities or financing or lending arrangements
Musk’s April 13 tweet last year about becoming profitable and cash flow positive and thus not needing to raise money would be subject to this rule. So would the tweet about having “funding secured” to take the company private.
7. Nonpublic legal or regulatory filings or decisions
The are all types of legal and regulatory decisions that the SEC is concerned Musk could reveal via tweet, especially if he is displeased with the decision.
8. Any event requiring the filing of a form 8-K by the company
The 8-K is the type of filing companies issue to cover all manner of corporate news that doesn’t fit into other, more-specific categories.
The SEC agreement specifically spells out news about a change in control of the company or a change in company directors or top executives. With Tesla’s revolving door of executive talent, the SEC wants to make sure news of this kind, which has been known to move Tesla stock, isn’t being revealed via tweet without permission.
9. Under the agreement, Tesla’s board can also determine any other topics for which Musk must get prior approval before tweeting
Tesla’s board, of which Musk is a part, might want the CEO to avoid getting himself in trouble in the future.