US Securities and Exchange Commission hits back at Tesla, Elon Musk's criticism

Elon Musk
The controversial billionaire has had problems with the agency since 2018. Photo credit: Getty Images

The US Securities and Exchange Commission (SEC) has hit back at accusations it is targeting Tesla and Elon Musk with 'endless' and 'unrelenting' harassment.

In a letter to Judge Alison Nathan, a New York District Judge, the SEC said parts of the letter from Tesla and Musk's lawyer Alex Shapiro were "simply not true".

The SEC along with both Tesla and Musk have had an ongoing battle since 2018, after the commission sued Musk over a tweet in which he said he had "funding secured" to take the company private at US$420 per share when it wasn't true.

With the tweet sending share prices soaring, both the company and the controversial billionaire settled by agreeing to pay US$20 million each in fines.

Tesla was also supposed to ensure that Musk's communications about the company, including tweets that could impact stock value, were approved in advance by lawyers.

That agreement was put to the test a year later, when Musk tweeted Tesla would produce half a million cars that year, much more than it had originally forecast.

When the SEC asked a federal judge to hold Musk in contempt, the Tesla CEO said it was an "unconstitutional power grab" and they were ordered by Judge Nathan to work things out.

The SEC then subpoenaed the company again, on November 16, 2021. That was just ten days after Musk had polled his millions of Twitter followers on selling 10 percent of his stake.

That triggered a drop in price, with many selling their shares. Musk later sold over 10 percent of his total share holdings in the company.

However the SEC denied the November subpoena was related to the original 2018 case, saying Shapiro's letter "incorrectly implies that the Commission staff have issued subpoenas in this litigation".

"That simply is not true," the letter written by Steven Buchholz said.

"The Commission staff have not issued any subpoenas in this litigation. If Tesla and Mr Musk have legitimate objections with the SEC's processes outside this litigation, they should pursue those objections in the appropriate forum."

In their letter to the judge, Tesla and Musk had said the SEC had been ignoring its commitment to distribute the earlier US$40 million fines to shareholders as it was instead devoting its "formidable resources to endless, unfounded investigations".

Buchholz's letter denied this, saying it was the first time the SEC had seen any concerns regarding the distribution of the money.

"Given the complexity of the distribution, it has taken time to develop the plan of allocation," he wrote.

"That process is nearing completion and, barring any unforeseen circumstances, the Distributions staff expects to submit the proposed plan of distribution for the Court's approval by the end of March 2022."