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Musk's lawyers call the tweet in SEC's contempt "not material"



NEW YORK (Reuters) – Elon Musk's lawyers said that the US Securities and Exchange Commission could not satisfy its heavy burden of showing that Tesla Inc's CEO was to be despised and the tweet that caused its despised movement both right and "not material".

FILE PHOTO: The SpaceX founder Elon Musk is looking at a post-launch conference after the SpaceX Falcon 9 rocket carrying the Crew Dragon spacecraft is lifted on a fuzzy test flight to the Kennedy Space Center International Space Station in Cape Canaveral, Florida, USA. , March 2, 2019. REUTERS / Mike Blake

In a Friday filing in the Manhattan federal court, Musk's lawyers also said their client "respects its obligations" to the electric car company, its shareholders and the court.

Musk tries to avoid being disdained for violating his scam in October 2018 with the SEC, to have tweeted at. 19.15. EST, February 19, to its over 24 million Twitter supporters, that Tesla could build about 500,000 cars in 2019.

SEC spokesman Ryan White declined to comment.

Musco's settlement, including $ 20 million civil fines for both him and Tesla, solved a SEC lawsuit over an August 7, 2018 Twitter post, in which Musk said he had "funding secured" to take his Palo Alto, California-based company private at $ 420 per. share.

SEC said that Musk had committed an "overt" violation of this solution by tweeting about Tesla's production prospects without first seeking approval from the company's lawyers.

In a Monday filing, the SEC went ahead and complained that Musk had never sought prior approval from any Tesla related tweets.

But in Friday's filing, Musk's lawyers said the SEC had admitted during settlement negotiations that Tesla-related tweets were not subject to a wide-ranging prior approval requirement.

They also said that the tweet was not material because it simply shifted old news, used generalities, was "hope and optimistic", and did not move Tesla's stock price.

"The key question is whether Musk complied with Tesla's policy, not whether the SEC is satisfied with Tesla's policy," says Musk & # 39; s lawyers. "Musk's belief that at 7:15 no prior approval was required was correct."

Until March 26, Musk has told US District Judge Alison Nathan whether he will have a probable hearing on the contempt movement. The SEC has said that no consultation is needed.

The October settlement required Musk to step down as Tesla's president. Legal experts stated that a contemptuous investigation could give him a higher fine, additional restrictions on his activities or even removal from Tesla's board of directors or as CEO.

On Friday, Tesla shares closed down $ 9.49, or 3.5 percent, at $ 264.53. They are 32 percent below their peak on August 7 after the funding secured tweet.

The case is SEC v Musk, U.S. Pat. District Court, Southern District of New York, No. 18-08865.

Reporting Jonathan Stempel in New York, Editing G Crosse and Diane Craft

Our Standards: Thomson Reuters Trust Principles.

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