Here’s how Elon Musk’s tussle with federal regulators went down in court

  • Federal regulators and Elon Musk are set to face off in federal court in New York on Thursday.
  • The SEC has asked the judge to find Musk in contempt of court for allegedly violating his settlement with the agency.

Tesla CEOElon Musk and his legal team have arrived for a Thursday court hearing in the case against him brought by the Securities and Exchange Commission (SEC).

The legal spat dates back to Musk’s September 2018 tweet that he was looking to take Tesla private at $US420 per share. That go-private bid did not work out, and resulted in two, $US20 million settlements between both Tesla and Musk with the SEC.

Musk also agreed to have his tweets monitored by a company employee, but Tesla has not disclosed who that “twitter sitter” is. That was fine, until Musk tweeted on February 19 that Tesla would make 500,000 cars in 2019 – a substantial deviation from what the company had told investors in its regulatory filings.

Despite a correction about four hours later that morning, the SEC accused Musk of violating the agreement and asked the court to find him in contempt of court.

Full coverage:
Elon Musk and the SEC are in a fierce battle over one of Musk’s tweets – here’s what you need to know about their dispute

Musk’s lawyers have argued in subsequent filings that the SEC is overreaching in asking the court to find Musk in contempt. According to Musk’s attorneys, the SEC was attempting to expand the settlement’s scope to include any of Musk’s tweets about Tesla, regardless of their relevance to shareholders.

“Such a broad prior restraint would violate the First Amendment,” Musk’s lawyers said.

The hearing, in US District Court for the Southern District of New York, kicked off off at 2pm Eastern. Business Insider has a reporter inside the courtroom – follow along for live updates by refreshing this page:

1:30pm: Elon Musk arrives in court


Elon Musk, clad in a dark suit and tie, showed up to the hearing in Lower Manhattan around 1:30 pm, and was spotted in the security line to enter the courthouse.

“I have great respect for the jugdes and the justice system, and I think that judges… the American system are outstanding,” Musk said on his way in, according to Reuters.

“We love you Elon,” some fans yelled as he made his way from a White Tesla car up the steps of the courthouse.

2pm: The hearing has kicked off

Judge Alison Nathan took the bench at the hearing’s scheduled start time, according to Bloomberg. Each side – Musk and the SEC – will have 45 minutes for oral arguments.

The courtroom is completely full, with 40-50 spectators overflowing into the jury stalls.

2:10pm: SEC argues Musk does not intend to comply with the settlement

Cheryl Crumpton, representing the SEC, said “it’s become pretty clear over the course of the last few weeks” that Musk never intended to comply with the settlement.

“Unless something is obviously immaterial it needs to get pre-approval,” she said in response to questions from the judge about what kind of tweets require pre-approval.

“Tesla still appears to be unwilling to exercise any meaningful control over the conduct of its CEO,” she said.

2:30pm: Tesla stock slowly rising


As the hearing progressed, Tesla’s stock was trying to pare some of its big losses incurred overnight after a disastrous deliveries report. Still, the stock was far into the red.

Follow Tesla’s stock price in real-time here.

2:50: The SEC is seeking fines if Musk violates the settlement again

The SEC told Judge Nathan that the regulatory agency is seeking “escalating fines” if Musk violates his settlement again. There’s no word yet on how much those fines, if approved by the court, may be.

2:55pm: It’s Musk’s turn

“We think it’s very clear that Mr. Musk retained discretion in the policy,” one of Elon Musk’s lawyers, John Hueston, argued when it was their turn for oral arguments. Hueston is arguing there is not a clear enough standard to enforce a penalty as harsh as finding Musk in contempt of court.

3:09pm: Judge orders a new agreement between Musk and the SEC

“My intent is not only to invite it but to order it,” Judge Nathan told the court, according to Bloomberg’s Dana Hull.

The Judge said she was surprised the SEC filed a contempt motion because “this [case] screams working it out.”

The Judge consistently tested the ambiguity of the current order, and when she pressed Musk’s attorneys on this, she found they seemed to argue that the Judge was not able to make a determination in this case.

“It sounds like you’re saying this Court could not order Musk in contempt,” she said.

Musk’s attorneys countered that she could, but couldn’t come up with any hypothetical scenarios in which that was case.

“Go home Judge Nathan,” she joked, later adding that Musk’s lawyers must not “be very imaginative” because should could think of some scenarious where she would be able to rule Musk in contempt of Court.

3:30pm: Musk’s lawyers conclude their arguments

Musk’s lawyers ended their 45 minutes of oral arguments by reading a list of Musk’s tweets that the SEC previously flagged as “questionable.” They also cited an MIT expert who said that if the tweets did not move Tesla’s stock price, then the market had clearly decided that the information was immaterial.

The SEC will get five minutes for rebuttal, according to Bloomberg.

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The SEC was then given 5 minutes to rebut Musk’s lawyers.

The SEC again reiterated that Musk had violated the order, and also said that it was still determining whether or not Tesla was “complying with the policy” it had set forth.

“Tesla has for whatever reason thrown its lot in with Mr. Musk,” said the SEC.

3:43pm: Judge says she will ensure all orders are complied with

“I must and I will ensure that court orders are followed,”Judge Nathan said. “It’s not a game, I don’t care if you are a small potato or a big fish.”

3:45pm: The hearing has adjourned.

At around 3:45pm Judge Nathan ordered the SEC and Musk to propose a new resolution within two weeks. They can then expect to hear from her in “due course,” according to Bloomberg.