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Judge schemes SEC, Teslas Musk to meet for at least one hour on new residence

NEW YORK (Reuters) – A federal judge in Manhattan on Friday ordered Tesla Inc, Chief Executive Elon Musk and the US Securities and Exchange Commission to meet for at least an hour to try to resolve the agency's concern over the billionaire's use of Twitter. FILE PHOTO: Tesla CEO Elon Musk arrives at a federal court in Manhattan for a hearing on his anti-fraud with the Securities and Exchange Commission in New York, USA, April 4, 2019. REUTERS / Shannon Stapleton SEC had asked US District Judge Alison Nathan to keep Musk in contempt over a February 19 tweet where the agency said he had incorrectly posted important information about Tesla's car production prospects without first seeking approval from his lawyers. In an order on Friday, the referee gave both sides until April 18 to reach a resolution. If they didn't, the judge said she would decide to keep Musk in contempt. If he is kept despised, the judge will allow the parties to weigh in on any sanctions. The case has high efforts for Tesla. When the SEC initially sued Musk in September, it had requested that he be removed. The two sides settled in October, with Musk agreeing as Tesla's chairman. The agreement also required the prior approval of Musk's written communication, which may be essential for the company. At a court hearing on Thursday, the SEC suggested that a major monitoring of Musk's communication, including the threat of new fines if he was disturbed, would be an…

NEW YORK (Reuters) – A federal judge in Manhattan on Friday ordered Tesla Inc, Chief Executive Elon Musk and the US Securities and Exchange Commission to meet for at least an hour to try to resolve the agency’s concern over the billionaire’s use of Twitter.

FILE PHOTO: Tesla CEO Elon Musk arrives at a federal court in Manhattan for a hearing on his anti-fraud with the Securities and Exchange Commission in New York, USA, April 4, 2019. REUTERS / Shannon Stapleton

SEC had asked US District Judge Alison Nathan to keep Musk in contempt over a February 19 tweet where the agency said he had incorrectly posted important information about Tesla’s car production prospects without first seeking approval from his lawyers.

In an order on Friday, the referee gave both sides until April 18 to reach a resolution. If they didn’t, the judge said she would decide to keep Musk in contempt. If he is kept despised, the judge will allow the parties to weigh in on any sanctions.

The case has high efforts for Tesla.

When the SEC initially sued Musk in September, it had requested that he be removed. The two sides settled in October, with Musk agreeing as Tesla’s chairman. The agreement also required the prior approval of Musk’s written communication, which may be essential for the company.

At a court hearing on Thursday, the SEC suggested that a major monitoring of Musk’s communication, including the threat of new fines if he was disturbed, would be an adequate remedy.

“This was a warning. I don’t think he gets a second warning,” said Marc Leaf, a former SEC lawyer in New York.

In a statement on Thursday, Musk stood by his actions.

“I have great respect for Judge Nathan, and I am pleased with her decision today. The current tweet was true, indispensable for the shareholders, and in no way an infringement of my agreement, “he said in the statement released by Tesla.

The decision in October resolved a lawsuit over a tweet last August 7, where Musk said he had “funding secured” to take Tesla privately to $ 420 per share.

On February 19 tweet said: “Tesla made 0 cars in 2011, but will make around 500k in 2019,” meaning 500,000 vehicles. hours later, Musk corrected and said that annual output would be “probably around” 500,000 at year-end, with full-year deliveries totaling about 400,000.

SEC said the first of the twitter February 19 was against Tesla’s Jan-30 outlook when annual model 3 production targeted over 500,000 as soon as the fourth quarter and forecasted 360,000 to 400,000 vehicle deliveries this year.

At that time, the SEC also said that Musk had violated its agreement one by sending a tweet that had not been noticed by Tesla’s lawyers and he should be held in disrepute. It did not say what sanctions it wanted to impose, which raised the question whether it would once again seek removal or propose less action.

Musk’s lawyers discouraged that the first February 19 tweet contained nothing new, and that the SEC had acknowledged during settlement negotiations that Musk did not need prior approval for all tweets about Tesla.

Reporting by Peter Henderson and Noeleen Walder; Editing by Howard Goller

Our Standards: Thomson Reuters Trust Principles.

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