> However a statement that "Tesla is going to begin shipping a new model of car" or "Tesla is going to begin shipping the Tesla truck" or "Tesla is going into the solar business by bailing out my other company" or other statements would be material (and therefore subject to pre-approval).

If those are all things that were in a recent public report, I don't see a difference. They're all public information about the company, and they all matter. Anything in the quarterly report should count as fully obvious in a "reasonable investor" context.

> Note that "Tesla makes cars" is itself materially different from "Tesla expects to ship around 500K cars in 2019" (even before considering that the former is true and the latter is false).

How so? If anything, "Tesla makes cars" is vastly more important than their production expectation. Is the different that it's in future tense? That again would only make his tweet less material.

That they were in a recent (but not within 2 days) public report is not in compliance with the prior consent decree entered into with the SEC from his prior misleading tweets in the late summer of 2018 which required the company to institute and executives to follow a policy designed to prevent such misleading tweets in the future. The company elected to enact a policy that clearly requires any edits to previously released/approved material to be re-approved and any disclosures more than 2 days after the approval to be re-approved. It is obvious that Musk violated that policy.

The filing is a very quick and clear read (probably less than 5 minutes to understand the essence of their straightforward case): https://www.documentcloud.org/documents/5750664-Show-Cause.h...

If it was material information, he very clearly violated the policy.

The rules about editing don't matter, because this post wasn't an edit.

But what does "information material to Tesla or its stockholders" actually mean?

If we take it completely literally, then almost any tweet that mentions Tesla would be in violation.

Maybe that's the actual intent. But it doesn't much sense. Why wouldn't the agreement just say that? And he's posted tons of tweets about Tesla, largely referencing news articles, and the SEC didn't say a word about any of them. Did he get approval for every single one of them? I think it's meaningful that the only tweet the SEC complained about was the one that appeared to have new information.

It seems like there's an implication that to be "material" the information has to actually matter to the people that get it. If he cites something that was in a news article, such as the 500k number, then it wouldn't be a problem, because everyone already has it.

And again, it's not an edit, so he can't be breaching the rules about edits. It's either a straightforward release of material information and he's in violation, or it doesn't count as material information and he's off the hook.

Is there any possibility in your mind that releasing a projected number of sales that is on the high end of a range previously given (which would be an edit of sorts) and was false/misleading was not material information to investors or prospective investors?

I have zero doubt it’s both material and misleading, even though material would have been enough to breach the prior agreement, but the combination of both is unlikely to escape the SEC attention.

I also don’t think this is anywhere near as bad as the summer “Funding Secured” outright fraud. If he’d done them in the opposite order in time, we might not ever be talking about this one and almost surely wouldn’t be getting SEC ire over this one (and obviously couldn’t get a contempt of court charge). With the pattern of facts as alleged, I think he’s well earned a contempt of court charge, and is likely both legally and literally true that he has contempt for the court.

Let me put it this way. If he goes on twitter and lies, then he can get in massive trouble but I don't think this agreement applies. This specific agreement is about him releasing actual information.

I don't consider lies to be "material information".

So in this case he was quoting public info, and he was misleading.

The agreement only cares about the first half of that sentence, and there are reasonable arguments in either direction about whether a quote of public info violates the agreement.

Then we come to the "misleading" part. Maybe he gets in trouble but I think using the agreement for that is barking up the wrong tree. Also people should expect tweets to have sloppy phrasing.

Excerpts rom the SEC court filing: The SEC required this provision as a term of its settlement with Musk in order to prevent Musk from recklessly disseminating false or inaccurate information about Tesla in the future. On February 19, 2019, Musk tweeted, “Tesla made 0 cars in 2011, but will make around 500k in 2019.” Musk did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million 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.

As one of the terms of his settlement, Musk agreed to comply with procedures implemented by Tesla that would require him to seek pre-approval of any written communications, including social media posts, that contained or reasonably could contain information material to Tesla or its shareholders.

Consistent with the Court’s Tesla Judgment, on December 11, 2018, Tesla adopted a “Senior Executives Communications Policy” (the “Policy”). Written Communications that contain, or reasonably could contain, information material to Tesla or its stockholders must, prior to posting or other publication, be submitted to Tesla’s General Counsel and Disclosure Counsel (or in the event of the General Counsel’s unavailability, Tesla’s Chief Financial Officer and Disclosure Counsel) for pre‐approval. Authorized Executives are not authorized to post or publish Written Communications that contain, or reasonably could contain, information material to Tesla or its stockholders without obtaining pre‐approval. The Policy provides a non-exclusive list of examples of information that may be “material to Tesla or its stockholders,” which includes “projections, forecasts, or estimates regarding Tesla’s business.” Id. at 1-2. Finally, Tesla’s Policy requires that [i]f an Authorized Executive (i) further edits a pre‐approved Written Communication, or (ii) desires to release a Written Communication more than two (2) days, after receipt of written pre‐approval, such Authorized Executive will re‐confirm the pre‐approval in writing in accordance with this Policy prior to release.

Could you make an attempt at arguing the reasonable argument in the other direction?

The argument is that "information material to Tesla or its stockholders" only applies to information that wasn't already public.

The tweet may have appeared to have nonpublic information, but it didn't actually have any.

Therefore the tweet didn't need approval.

That's the core of the argument. Is that clear enough? I already tried to explain why I think it's reasonable in previous posts, but I can do it again if you want me to.

It is clear enough now; I missed that before.

I missed that as the thrust of your argument, because even if the information in that tweet was "material but not non-public due to previously approved disclosure", it would fall afoul of the "more than 2-days since approved" and "approved previously but now has edits" restrictions, which still leaves Musk in violation of the policy and therefore the court agreement.

(I also believe that the update of the range from "350k-500k" [previously public] to "around 500k" [in the tweet] to be a material update when given by the CEO of a company and that the SEC will argue that is also the case, but I agree/admit that there's some room for argument on that point.)

Thank you for the topic-centered discussion and I hope you experienced (as I did) this exchange as "disagreeing without being disagreeable".

> even if the information in that tweet was "material but not non-public due to previously approved disclosure", it would fall afoul of the "more than 2-days since approved" and "approved previously but now has edits" restriction

It's more that the information is "material but not non-public", end of sentence. He's not piggybacking on a previous approval of a post. He's piggybacking on the fact that it's public.

Even if the previous disclosure had been in a post by Musk, I'd argue those rules don't apply to a new post. Those rules are about how approval for a specific post can be revoked, by delaying too long or by editing. They only affect that specific post, not future uses of now-public information.

But the previous disclosure was not such a post. It bypassed the entire tweet approval process. So these secondary rules definitely do not apply.

> (I also believe that the update of the range from "350k-500k" [previously public] to "around 500k" [in the tweet] to be a material update when given by the CEO of a company and that the SEC will argue that is also the case, but I agree/admit that there's some room for argument on that point.)

That's an okay belief. I'm not saying the result is clear-cut, just that Musk has a reasonable argument.

> Thank you for the topic-centered discussion and I hope you experienced (as I did) this exchange as "disagreeing without being disagreeable".

Sure, I'd agree there.

> It's more that the information is "material but not non-public", end of sentence.

Even there, I think that's covered by "Written Communications that contain, or reasonably could contain, information material to Tesla or its stockholders must, prior to posting or other publication, be submitted to Tesla’s General Counsel and Disclosure Counsel for pre‐approval."

That's the core of the argument.

Taking it literally might be the right interpretation. But it also fails to make sense in other ways. Is there an implied "not already public"? It's honestly hard to tell.