Elon Musk has made national and international headlines for his innovative electric car company, Tesla. While many drivers in New York are familiar with the types of vehicles manufactured by the company, some might be surprised to learn that its founder and CEO is facing criminal charges. Accused of violating a securities fraud agreement, Musk could have to fork out a significant fine.
On Feb. 19, 2019, Musk tweeted that this year Tesla would manufacture 500,000 vehicles. However, at the time that he wrote that tweet Tesla was slated to only produce 400,000 vehicles by the end of 2019. A few hours later he sent out another tweet stating that he meant the company would produce half a million vehicles over the period of 12 months, but the damage was apparently already done.
The Securities and Exchange Commission alleges that Musk’s tweet was not only misleading, but that it also violated a securities fraud agreement. According to the agreement, Musk is required to get approval before posting any news about Tesla on any social media platforms. Tesla told the SEC that it did not give its approval for that tweet, and it recently announced that it will only deliver between 360,000 and 400,000 vehicles by year’s end. Tesla’s production for 2019’s first quarter is already 31 percent less than the final quarter of 2018.
If found guilty of committing securities fraud in violation of the agreement with the SEC, Musk could potentially have to pay up to $20 million in fines. It is also possible that Tesla’s board could face punitive action. These are both serious actions that anyone facing such charges in New York could have to deal with. As such, developing a secure foundation for a criminal defense against such charges is important, but this takes time, so taking a timely approach is generally a good idea.