Once again, Elon Musk and the Securities and Exchange Commission have reached détente over the Tesla CEO’s often audacious social media practices.

Another proposal brokered between the two parties was recently approved by Judge Alison Nathan of the U.S. District Court for the Southern District of New York.

At the heart of the initial controversy was an Aug. 7, 2018, Twitter post by Musk: 

“Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the SEC later wrote of the tweet, alleging that the statement “funding secured” was “false and misleading.”

In October, after weeks of negotiations, Musk and Tesla reached a settlement with the SEC over those allegations. The deal included a diminished role for Musk (a three-year ban as chairman of the Tesla board), safeguards to keep his public-facing commentary in check, and a more independent oversight role for the board of directors. Musk and Tesla were each fined $20 million.

Tesla also agreed to demonstrate greater scrutiny of all public-facing communications, including, but not limited to, Musk’s posts on social media, the company’s Website, press releases, and investor calls. The final settlement demanded “pre-approval of any such written communications that contain, or reasonably could contain, information material to the company or its shareholders.”

The SEC, in its initial filing, claims the terms of that settlement were all but ignored. It alleges that a separate tweet by Musk on Feb. 19 “was a blatant violation” of the court’s order. In it, he wrote that Tesla “will make around 500k” cars in 2019. This, the Commission says, is information material to the company and its shareholders.

“The Court-ordered pre-approval requirement for Musk’s written communications lies at the heart of the settlement. Musk’s unchecked and misleading tweets about Tesla are what precipitated the SEC’s charges, and the pre-approval requirement was designed to protect against reckless conduct by Musk going forward,” the Commission said. “It is therefore stunning to learn that, at the time of filing of the instant motion, Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the Court-ordered pre-approval policy went into effect.”

On March 11, Musk filed his counter to the SEC’s allegations. He “did not violate” the order, and “there is no basis to issue contempt sanctions against him,” the brief says.

“The Order requires that Musk comply with Tesla’s policy on the pre-approval of certain communications ‘that contain, or reasonably could contain, information material to Tesla or its shareholders.’ As Tesla has confirmed, Musk has complied with the policy, which permits him to exercise his reasonable discretion in the first instance to determine whether his communications contain information requiring pre-approval,” the filing says. “Musk correctly used his discretion to determine that his tweet was not material and did not contain information that could reasonably be considered material.”

One final counterpunch: Musk’s brief alleges that “the Order, as the SEC interprets it, would raise serious First Amendment issues and implicate other constitutional rights.”

A Feb. 25 SEC filing argues that Musk should be “held in contempt for violating the clear and unambiguous terms of the Court’s Oct. 16 final judgment.” It later filed a new brief intended to counter that defense and flesh out contempt allegations.

On April 5, the Court, which retains final approval over a settlement between the two entities, demanded new oral arguments and ordered the parties to meet and confer for at least one hour in an effort to resolve the Commission’s contempt motion and consider modifications to the Court’s Final Judgment and Tesla’s Senior Executives Communications Policy.

The parties did manage to reach an agreement to resolve the Commission’s pending contempt motion and modify the Court’s Final Judgment in the case.

The new, approved proposed order would replace and supersede previous agreements.

Musk will be required to have public-facing correspondence approved by an experienced securities lawyer employed by the company if it contains information regarding any of the following topics:

  • the company’s financial condition, statements, or results, including earnings or guidance;
  • potential or proposed mergers, acquisitions, dispositions, tender offers, or joint ventures;
  • production numbers or sales or delivery numbers (whether actual, forecasted, or projected) that have not been previously published via pre-approved written communications or deviate from previously published Official Company Guidance;
  • new or proposed business lines that are unrelated to then-existing business lines (vehicles, transportation, and sustainable energy products);
  • projection, forecast, or estimate numbers regarding the company’s business that have not been previously published in Official Company Guidance or deviate from previously published Official Company Guidance;
  • events regarding the company’s securities (including Musk’s acquisition or disposition of the company’s securities), credit facilities, or financing or lending arrangements;
  • non-public legal or regulatory findings or decisions;
  • any event requiring the filing of a Form 8-K, including a change in control, or a change in directors, any principal executive officer, or any person performing similar functions, or any named executive officer.

“This enhanced clarity will reduce the likelihood of future disputes regarding compliance with this provision of the Final Judgment,” the Court wrote.

The latest settlement and clarification is not sitting well with SEC Commissioner Robert Jackson.

“Given Mr. Musk’s conduct, I cannot support a settlement in which he does not admit what is crystal clear to anyone who has followed this bizarre series of events,” he said in a statement. “Musk breached the agreement he made last year with the Commission and with American investors.”