Recently, the US Securities and Exchange Commission (SEC) has made a shocking announcement that Tesla CEO Elon Musk will still need approval from lawyers before publishing tweets that are related to the company. This news comes in response to Musk’s frequent Twitter activity and its impact on Tesla’s stock value.
Musk has been under the SEC’s microscope due to his use of Twitter to make public announcements affecting the company. This is a violation of a 2018 Securities Exchange Commission settlement ruling with Musk, which required him to get approval from a company lawyer before publishing any discussions involving potential corporate activity. The ruling came after Musk sent out a tweet saying that he had secured the funding to take Tesla private at $420 per share. The tweet caused a significant boost in stock prices, which were later revealed to be inaccurate.
The new ruling by the SEC means that Musk has to be more cautious in how he uses Twitter. The company’s General Counsel will now have to approve any of Musk’s tweets deemed related to corporate activity. Furthermore, Musk will now have to report any of his Tweets to Tesla’s board of directors, who will then assess the impact of his postings.
Although this ruling may seem like an infringement on Musk’s freedom of speech, the SEC has argued that it is necessary to protect the public from being misled by inaccurate information sent out via social media. Market manipulation is illegal, and the SEC wants to make sure that investors are not at risk of being misled.
The ruling has been met with mixed responses from investors. On one hand, it is seen as a way to protect people from inaccurate information on the internet, but on the other, some investors have argued that this could lead to less openness from companies when making announcements.
Regardless, the SEC’s message is clear – Musk must now be more careful if he plans to use Twitter as a way to communicate news with investors. Twitter can be a powerful tool to spread information, but it must be used responsibly.
The SEC’s announcement is a reminder for any company executive, especially a CEO or chairman, that the decisions made via social media have serious implications. This is especially true when it comes to companies listed on the stock market, where even the smallest tweets could cause an unexpected surge or drop in stock prices. All companies should take this announcement seriously and ensure they have adequate procedures in place to protect their investors from inaccurate information.
