Tesla’s stock sank more than seven percent Friday after its chief executive Elon Musk taunted federal regulators days after reaching a settlement with them over accusations of fraud, alleging they had sued him last week to help his enemies.
“Just want to [say] that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!” he tweeted Thursday, a jeering reference to the Securities and Exchange Commission, whom he’d settled with five days earlier.
The SEC declined to comment. Tesla did not respond to requests for comment.
Musk doubled down on the tweet shortly after. “Why would they be upset about their mission? It’s what they do,” he said of the SEC.
The mocking tweets again raised doubts that the company could rein in its eccentric celebrity billionaire, who pushed the company further into chaos in August when he tweeted that he had the “funding secured” to take the electric-car company private.
The SEC sued him last week, accusing him of misleading investors and pushing to ban him from running any public company. Musk originally refused a settlement but relented on Saturday, agreeing to step down as Tesla’s chairman for three years and pay a $20 million fine.
The settlement mandated that the company must implement "mandatory procedures and controls to oversee all of Elon Musk’s communications regarding the Company made in any format.” The company has declined to provide detail in recent days over what those controls would entail.
Musk’s defiance on Twitter, where he has 22 million followers, could prove risky or unwise: Regulators had pushed to bar him from leading the company, and could do so again if they feel Musk or the company have not abided by the deal.
But some former SEC officials and legal experts were divided over whether Musk’s comment had crossed a legal line.
“I think it is juvenile and sophomoric and narcissistic, but I don’t think it has particular relevance to the subject of the lawsuit against him,” said Harvey Pitt, the SEC chairman under President George W. Bush.
“It is the essence of free speech. ... He is just belittling the SEC," Pitt added. "It is an indication of impetuousness, but I don’t think it’s a securities law violation. It’s just plain bad taste.”
Musk has frequently sparred with short sellers who have bet against the company, and his tweet suggests he believes the SEC acted to benefit anti-Tesla investors. Tesla stock dropped roughly 3 percent in after-hours trading.
The tweet came just hours after U.S. District Court Judge Alison Nathan in Manhattan ordered Musk and the SEC to submit a joint letter justifying the terms of the settlement by Oct. 11. The letter should explain why the deal is “fair and reasonable,” Nathan said in the court order. Nathan must approve the settlement’s terms.
Over the weekend, Musk fired off another tweet that some took as a subtle jab at the regulators seeking to control him. “Naughty by Nature,” he tweeted, including a winking face.