Will Elon Musk Need a Twitter Sitter?

for violating in October settlement over tweets. With a tweet in February and hearing on Thursday, Judge seemed to have kicked the conflict back to the parties, joining me as Peter Handing, professor at Wayne State University Law School. So, is this basically a punt where the judge says, you guys work this out, I have some more important work to do here. Well. Certainly judges much prefer, especially in civil cases, that the parties work it out among themselves.

I think calling it a punt is probably the best way to describe it. That she has said, if you really want me to decide, you can force me to by not agreeing, But I think her very strong preference is that she doesn't want to hold Musk in contempt, nor does she want to smack down the SEC. So I think she's very much hoping that they will come up with some compromise that she can then sign off on.

So it appears the SEC's reading of the agreement was too restrictive and Musk's reading would just undermine the agreement in full. So is it going to end up somewhere in the middle. Oh, I certainly suspect, and I think the key question is whether Elon Muski is willing to compromise, because, um, you know, he he's shown some rather substantial to steam for the SEC. But Kenny's attorneys convinced him that let's come up with something that essentially works as a fake

saving device for both sides and then the judges. At least she signaled that she would be willing to sign off on that if the parties can't agree. So I think we'll see something maybe somewhere in the middle. I'm not sure who's going to get to crow about it, but certainly, um, I don't think we'll see major changes

to the settlement agreement. So Musk's lawyers had argued in court filings that that he has curtailed his use of Twitter recently, but a review of his account shows he's tweeted more in March than any other month since June. But could it be that the people who follow him on Twitter no not to rely on his tweets. Does the SEC have more important things to go after than this, Well, I certainly think the SEC wanted to send a message um, and especially you know they cited his interview on sixty

Minutes UM in their contempt filing. I think what the SEC wants is at least some acknowledgement that that settlement agreement had some teeth to it, beyond the twenty million dollars that both Tesla and must paid. I think they want to see that Twitter is not just going to be a way for him to communicate anything that he feels like. And so what their goal is I suspect is to get an adult in the room to be

able to look at the tweets. And that may be the compromise they come up with that before he tweets, he gets someone to review it in advance, although you know, you wonder whether he would be willing to do that. I thought he already had a so called Twitter sitter. Well, he has something of a Twitter sitter, although in the settlement agreement it's only when he's going to disclose what's called material and from nation, in other words, information an

investor would consider important. Um, that's when he has to have it reviewed. But for his other things, if he wants to comment on the latest full moon, he could probably do that. I expect the SEC is hopeful that um, he might start to cut back on his Twitter use, and one way to do that would be to get someone else in there to review it. So you may

have to get a full time Twitter center. Now. Could an agreement possibly include a scale of fines escalating fines and we've talked before about our fines really useful when you're facing people with so much money. Well, that's certainly the big question that um, you know, I mean, if the first fine we're fifty or a hundred thousand dollars um for a billionaire like Elon Musk, that's more or less tip money. Um, And is that even going to

get his attention? Maybe the SEC comes up with some type of schedule, of course, though that would likely require them to go to the judge to get her judge Nathan to impose a fine. And so I'm not sure how elaborate they want to be here. I suspect that the SEC's bigger goal is just to try to get him not to tweet about the company as much as he had, or at least be a bit more restrained in that you could put fines in there. But you know, is a billionaire going to notice a fine that's listed

in the thousands of dollars? I think the answer to that is no. And Um, as far as the Department of Justice, it's investigation of Musk and Tesla, where does that stand? Well, we haven't heard much about that lately. They were looking at the company's disclosures with regard are to their production. UM. That's an area typically where the Justice Department defers more to the SEC because it's a

corporate disclosure issue. UM. I question whether we'll see anything come out of the Justice Department's investigation because that's not an easy case to make. I mean that companies make estimates all the time, and a lot of times they're wrong, and so the companies are allowed to make mistakes and be able to say things unless you're intentionally misleading investors, and my bed is Tesla was not trying to mislead investors. Elon Musk is simply pumping up Tesla and saying, Gee,

what a great company we are. Well, I would like to be at the meeting the judge ordered on. The judge ordered that must meet with SEC officials for at least one hour within the next two weeks. And considering all the things he has said, all the negative things he said about the SEC, what might that meeting be? Like, Peter, Well, you know, you think back to your elementary school or high school days when you were called It's a long time to think back. Okay, well, I know it's a

long time for me too. But it's essentially he's being sent to the principal's office, um, and they're gonna have to sit down and work something out. He's gonna have his lawyers with him. Uh So I expect we we may well see a bit more circumspect Elon Musk, at least for a little while. UM will run out. Long term.

I think he enjoys having his twenty plus million followers on Twitter too much to be able to really restrain himself from saying things, and he likes the publicity, and apparently he obviously we would have heard about it if he was disrespectful in any way in the courtroom yesterday. So he must be at least behaving himself in that regard certainly, and I expect his lawyers had a brief discussion with him, saying, you had better be careful in

front of a federal judge. If you do anything to mouth off, that could be disastrous for you with the sec. You know, maybe he can be a little bit more lippy. All right, Thanks so much, Peter. This will continue on I can guarantee that that's Peter Handing, a professor at Wayne State University Law School. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud, and on bloomberg dot com

slash podcast. I'm June Brosso. This is Bloomberg