Miffed about the constant scrutiny from the U.S. Securities Exchange Commission, Tesla Inc.'s TSLA CEO Elon Musk is defending himself against the securities regulator.
What Happened: The SEC is channeling resources to "endless investigations" into Tesla and its founder, Musk's lawyer Alex Spiro said in a letter to Alison Nathan, the U.S. District Court of New York. Nathan presided over a settlement agreement that Musk reached with the SEC in 2018 over the former's tweet regarding having secured funding to take the company private.
In the letter, the lawyer accused the SEC of not keeping up its commitment to distribute to Tesla shareholders the $40 million it collected as part of the settlement agreement. Instead, the regulator was spending energy and resources to investigate Musk and Tesla's compliance with the consent decree. It has been dispatching subpoenas in this regard without court approval, Musk's lawyers alleged.
Tesla said in its 10-K filing on Feb. 7 that the company received a subpoena from the regulator in mid-November, shortly after Musk asked his Twitter Inc TWTR followers for suggestions on whether or not he should sell some of his stake in the company.
The subpoena issued on Nov. 16 sought information on the company's "governance processes around its compliance with the SEC settlement, as amended."
Musk's lawyer also requested the court to schedule a conference to resolve the issue.
The 2018 settlement, according to the letter, was made with the intent of stopping SEC's harassment and allow the court to monitor compliance issues.
Related Link: Why Tesla Is No Longer Working On A Lower-Priced EV
Musk's lawyer also stated that SEC's "unrelenting investigation" is primarily because the Tesla chief has been very vocal in his criticisms against the government. The regulator seems to want to monitor and control Musk's social media posts.
"SEC's outsized efforts seem calculated to chill his exercise of First Amendment rights rather than to enforce generally applicable laws in evenhanded fashion," the letter said.
The letter was written with the hope of ending SEC's harassment and to ensure it delivers on its commitment to the company's shareholders and the court.
Why It's Important: Musk's infamous "funding secured" tweet in Aug. 2018 landed the company and its outspoken CEO in trouble. The tweet suggested that Musk was planning to take the company private for $420 per share, while such a move was not even close.
As part of the settlement negotiated with the SEC, Musk had some of his communications that would impact the stock price vetted by his lawyers. He was also forced to give up being chairman of Tesla's board of directors.
As early as last week California's Department of Fair Employment and Housing filed a lawsuit over the company's alleged discriminatory policies against Black employees at its Fremont facility.
These legal noises have the potential to distract Tesla from its core business, especially as competition intensifies in the industry.
TSLA Price Action: Tesla shares were down 3.40% to $892.95 Thursday at publication.
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