NEW YORK (AP) — A judge on Thursday urged stock market regulators and Tesla CEO Elon Musk to amicably settle their dispute over his tweets.
If not, she said she’ll decide whether to grant regulators’ request that the outspoken executive face escalating fines if he breaks rules protecting investors.
U.S. District Judge Alison J. Nathan asked how she should punish Musk if she finds him in contempt for violating a deal with the Securities and Exchange Commission requiring him to first clear with lawyers tweets that might disclose important company facts.
Hueston said the SEC’s first step after the tweet about production should have been to approach Tesla in good faith, and Nathan agreed.
“The parties should be meeting, conferring and providing some clarity so this issue won’t happen again,” Hueston said.
The SEC says its deal doesn’t restrict Musk’s freedom of speech because as long as his statements are not false or misleading, they would be approved.
Meanwhile, Tesla’s shares fell 8 percent Thursday after the company said it churned out 77,100 vehicles in the first quarter, well behind the pace it must sustain to fulfill Musk’s pledge to manufacture 500,000 cars annually.
Tesla also said it only delivered 63,000 vehicles in the quarter, down 31 percent from 2018’s fourth quarter.
The SEC sought to oust Musk from his role as chairman and CEO over his August tweet. Instead, Musk and Tesla agreed to pay $40 million and made other concessions to settle the case. Musk agreed to step down as chairman for three years and remain in his role as CEO. He also begrudgingly agreed to seek approval from a company lawyer before he tweets.
Musk’s unpredictable behavior has led some to question whether he should remain CEO of Tesla, while others say he’s the visionary behind the company and too valuable to lose. Last year, Musk berated stock market analysts for asking questions about Tesla’s finances and prompted a defamation lawsuit when he called a diver who helped rescue 12 boys on a Thai soccer team from a flooded cave a pedophile.
As of Thursday’s close, Tesla shares were down 19.5 percent so far this year.
Associated Press Writer Larry Neumeister contributed to this report.