In response to the SEC's rebuttal last week, the legal team of Tesla Inc. CEO Elon Musk maintained in a new court filing that a Feb. 19 tweet was "not material" to Tesla investors as the regulator had claimed and stated that the SEC's argument "rests on an incorrect interpretation of the policy."
In a March 22 filing to the U.S. District Court for the Southern District of New York, Musk's lawyers said the tweet did not contain material information as the production forecasts mentioned in the tweet were already publicly available through the carmaker's Jan. 30 earnings call and previous announcements.
"The SEC boldly refers to the 7:15 tweet as 'demonstrably material,' but then fails to demonstrate such. The SEC offers no expert testimony, while ignoring the expert analysis finding that the tweet did not cause any notable movement in the after-hours market," it said in the filing.
In addition, Musk's lawyers said the arguments being presented by the SEC are based on "a radical reinterpretation of the order that would impose sweeping restrictions to which Musk never consented."
"Nowhere does the policy require that all communications on the listed subjects be submitted for pre-approval regardless of their significance or context," Musk's lawyers wrote. They added that the settlement policy includes a clause stating that information on identified subjects "may, depending on its significance," be material but that the SEC never mentions this in its initial response to Musk.
The regulator is seeking to hold Musk in contempt for the tweet, arguing that it violated the settlement deal they entered into last year after Musk tweeted about plans to take the company private. The agreement requires the CEO to seek pre-approval for social media posts that may be relevant to the company and its investors.
Musk's team refuted the SEC's claim March 11, saying Tesla's disclosure counsel reviewed the executive's tweet and decided it was not material and does not require pre-approval. The SEC filed a counterclaim shortly after.
The SEC did not immediately respond to S&P Global Market Intelligence's request for comment.
Tesla's shares closed down 3.46% at $264.53 on March 22.