01:14 GMT22 October 2020
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    The news comes after regulators accused Mr. Musk of fraud based on misleading tweets about privatising the company last year, prompting calls to unseat him as CEO.

    Tesla CEO Elon Musk is faced with an order of contempt from the US Securities and Exchange Commission (SEC) based on accusations he violated a fraud settlement by tweeting unapproved material, plummeting the firm's shares 5 percent.

    READ MORE: Green Light: 'Budget' Tesla Model 3 Approved For Deliveries To Europe

    Musk and Tesla settled the lawsuit, which demanded that all statements made by Mr. Musk were to be checked by the company beforehand.

    The SEC referenced in a court filing on Monday a 19 February tweet Mr. Musk had made, where he said “Tesla made 0 cars in 2011, but will make around 500k in 2019”. However, the Tesla CEO had not sought preapproval before the tweet was published to an audience of more than 24m people.

    "Musk has thus violated the court’s final judgment by engaging in the very conduct that the preapproval provision of the final judgment was designed to prevent," the SEC said in its motion in a Manhattan federal court filed on Monday.

    The motion requests that the judge issues an order forcing Musk to defend his actions against contempt charges for violating the terms of the settlement.

    Four hours after his tweet, Mr. Musk corrected it to say that the "annualised production rate" would remain around 500,000, with roughly 400,000 deliveries expected.

    Whilst Tesla did not immediately respond, Musk defended his tweets on late Monday, stating that the "SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k. How embarrassing …". The CEO was referring to statements in January he made to analysts, stating that Tesla would make "maybe on the order of 350,000 to 500,000 Model 3s, something like that this year".

    Tesla has been mired in controversy after the Mr. Musk and his firm agreed to pay $20m (£15.2m) each to the SEC, in addition to the billionaire stripping himself of his title as chairman. Mr. Musk remains the CEO of the company.

    The automaker has faced a wave of troubles in recent years after Musk was probed by the FBI after allegations he had defrauded shareholders surfaced, in addition to US president Donald Trump ending a federal subsidies programme of $7,500 in tax breaks to electric vehicle buyers, flooding Tesla's Model 3 stocks with 3,000 units in its' US inventories. Troubles were compounded after the firm had to slash seven percent of its full-time staff to reduce Model 3 production costs in mid-January.


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