Elon Musk’s lawyers call tweet in US SEC’s contempt bid ‘not material’

Elon Musk’s lawyers said that the US Securities and Exchange Commission (SEC) failed to satisfy its heavy burden of showing that the Tesla chief …

In a Friday filing in Manhattan federal court, Musk’s lawyers also said their client “respects his obligations” to the electric car company, its shareholders and the court.

Musk is trying to avoid being held in contempt for violating his October 2018 fraud settlement with the SEC, for having tweeted at 7:15 p.m. EST on Feb. 19 to his over 24 million Twitter followers that Tesla could build around 500,000 vehicles in 2019.

SEC spokesman Ryan White declined to comment.

Musk’s settlement, including $20m civil fines for both him and Tesla, resolved an SEC lawsuit over an Aug. 7, 2018 Twitter post in which Musk said he had “funding secured” to take his Palo Alto, California-based company private at $420 a share.

The SEC said Musk committed a “blatant” violation of that settlement by tweeting about Tesla’s production outlook without first seeking approval from the company’s lawyers.

In a Monday filing, the SEC went farther, complaining that Musk had never after the settlement sought pre-approval for any Tesla-related tweets.

But in Friday’s filing, Musk’s lawyers said the SEC had conceded during settlement talks that Tesla-related tweets were not subject to a broad pre-approval requirement.

They also said the tweet was not material because it simply restated old news, used generalities, was “aspirational and optimistic,” and did not move Tesla’s share price.

“The key question is whether Musk complied with Tesla’s policy, not whether the SEC is satisfied with Tesla’s policy,” Musk’s lawyers wrote. “Musk’s belief that the 7:15 tweet did not require pre-approval was correct.”

Musk has until March 26 to tell U.S. District Judge Alison Nathan whether he wants an evidentiary hearing on the contempt motion. The SEC has said no hearing is necessary.

The October settlement required Musk to step down as Tesla’s chairman. Legal experts said a contempt finding could subject him to a higher fine, further restrictions on his activities, or even removal from Tesla’s board or as chief executive.

Tesla shares closed Friday down $9.49, or 3.5pc, at $264.53. They are 32pc below their peak set on Aug. 7, after the “funding secured” tweet.

The case is SEC v Musk, U.S. District Court, Southern District of New York, No. 18-08865.

Reuters

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Investors Should Steer Clear When Lyft Goes Public

… anti-Uber, more socially responsible than its larger rival, given past adverse publicity about Uber Technologies and its former CEO, Travis Kalanick.

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https://www.barrons.com/articles/why-investors-should-avoid-lyft-stock-when-it-goes-public-51553295939

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Dueling Over Lyft’s IPO

… limited super-voting shares after private investors complained they gave too much control and latitude to founder and former CEO Travis Kalanick.

Ride-hailing startup Lyft is planning to tap the public markets next week, which should be a good moment for the company and investors. But Lyft’s plan for dual-class voting shares has kicked up a fuss from pension funds, which means it’s time to explain again that corporate governance is not a one-man, one-vote democracy.

The seven-year-old Silicon Valley startup on Monday disclosed more information regarding its initial public offering next week that aims to raise $2 billion at a targeted $23 billion valuation. Co-founders…

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Elon Musk Attorney: ‘SEC’s position is wrong at virtually every level’

Tesla (TSLA – Get Report) CEO Elon Musk renewed his arguments in a court filing Friday that he shouldn’t be held in contempt of court for tweets he …

Tesla (TSLA) CEO Elon Musk renewed his arguments in a court filing Friday that he shouldn’t be held in contempt of court for tweets he made last month about Tesla’s production numbers.

“The SEC’s position is wrong at virtually every level,” write Musk’s legal team in the filing, led by attorney John C. Hueston of Hueston Hennigan LLP.

Musk’s lawyers argue that U.S. Securities and Exchange Commission lawyers misinterpreted the deal he struck with them to settle securities fraud charges last September, saying that “The SEC’s Reply makes clear that its effort to hold Musk in contempt relies on a radical reinterpretation of the Order that would impose sweeping restrictions to which Musk never consented.”

His team also argues that a tweet saying Tesla would produce 500,000 vehicles in 2019 was based on information already made public.

“The key question is whether Musk complied with Tesla’s Policy, not whether the SEC is satisfied with Tesla’s Policy,” wrote Musk’s attorneys.

Musk’s belief that his tweet, say his lawyers, “did not require pre-approval was correct. Every hallmark of immateriality is present: the tweet restated previously-disclosed information, used generalized terms, was aspirational and optimistic, and caused no reaction in after-hours trading.”

The post was made on Twitter on Feb. 19 at 7:15 p.m. ET and read: “Tesla made 0 cars in 2011, but will make around 500k in 2019.”

Musk’s attorneys say that this information was not new and could be inferred from earlier disclosures, such as a Jan. 30 earnings call announcing that Model 3 production would be 350,000-500,000 and announcements that Model S and X vehicles were already being produced at a rate of 100,000 per year.

SEC lawyers moved late last month to have Musk found in contempt of court because Twitter posts the CEO put out about production numbers weren’t reviewed by corporate authorities.

In a court filing on Monday the SEC called the billionaire’s behavior “stunning,” given the settlement he agreed to last September to resolve an earlier case in which he tweeted falsely that he had secured funding to take Tesla private at $420 a share.

The consequences of contempt of court finding could be serious for Musk.

The possibilities include new fines on Musk, a court-appointed communications monitor at Tesla, or even a trial that could result in the outspoken entrepreneur from being barred from serving as an officer or director of any public company, former SEC commissioner Harvey Pitt told TheStreet in late February.

Shares of Tesla closed down 3.46% on Friday to $264.53.

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EXCLUSIVE: Elon Musk’s Starhopper prototype gleams on the launchpad in stunning aerial photos …

SpaceX is gearing up to conduct the first test hops of Elon Musk‘s Starship prototype rocket at its Boca Chica, Texas facility. In recent days, the test site …

SpaceX is gearing up to conduct the first test hops of Elon Musk‘s Starship prototype rocket at its Boca Chica, Texas facility.

In recent days, the test site has been swarming with activity as engineers moved the gleaming spacecraft to the launch pad and installed its sole Raptor engine that packs twice the firing power of SpaceX’s older Merlin engines.

A new set of aerial images show off SpaceX’s progress in preparation for the suborbital hop tests, which were slated to take place earlier this week, but were later postponed following several days of bad weather.

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A new set of aerial images show off SpaceX's progress in preparation for the suborbital hop tests, which were slated to take place earlier this week, but were later postponed following several days of bad weather. Pictured is the Starship prototype

A new set of aerial images show off SpaceX's progress in preparation for the suborbital hop tests, which were slated to take place earlier this week, but were later postponed following several days of bad weather. Pictured is the Starship prototype

A new set of aerial images show off SpaceX’s progress in preparation for the suborbital hop tests, which were slated to take place earlier this week, but were later postponed following several days of bad weather. Pictured is the Starship prototype

WHAT IS A ‘HOP’ TEST?

SpaceX’s Starship prototype, called the Starhopper, will undergo several tests to make sure its systems work properly.

The first of these tests, called a ‘hop’ test, is simply a short static fire test.

During a hop test, the Starhopper’s single Raptor engine will be fired up.

However, spectators won’t be able to see much, if any, of the action.

The hop involves a ‘really short’ low-altitude hovering demonstration, wherein the craft lifts just a few feet off the ground.

Elon Musk’s rocket firm will also conduct ground systems testing and load it with propellants.

The rocket firm had eyed Wednesday, Thursday or Friday as possible dates to carry out the ‘hop’ tests.

Now, the Federal Aviation Administration has alerted to flight restrictions in the area between 10:00a.m. (ET) and 7:00p.m. (ET) on March 25th, 26th and 27th.

This indicates that the hop tests could take place as soon as early next week, though neither SpaceX nor Musk have posted any word on the matter.

In preparation for the potential test fire, SpaceX had moved the Starhopper suborbital vehicle to a launch pad at its Boca Chica test site near Brownsville, Texas.

SpaceX was expected to conduct hop tests on Thursday, with a six-hour launch window opening at 10a.m. (CST) and lasting through 4p.m. (CST).

If the hop tests go according to plan, it will serve as an important baby step toward Musk’s wider plan to send humans on a mission to the moon.

However, spectators both on the ground and from afar won’t be able to see much, if any, of the action during the hop test.

The Starship prototype, called Starhopper, was moved from its build site to a launch pad (pictured) at SpaceX's Boca Chica, Texas testing site. That, in addition to the FAA establishing flight restrictions in the area, indicates tests will take place soon

The Starship prototype, called Starhopper, was moved from its build site to a launch pad (pictured) at SpaceX's Boca Chica, Texas testing site. That, in addition to the FAA establishing flight restrictions in the area, indicates tests will take place soon

The Starship prototype, called Starhopper, was moved from its build site to a launch pad (pictured) at SpaceX’s Boca Chica, Texas testing site. That, in addition to the FAA establishing flight restrictions in the area, indicates tests will take place soon

If the hop tests go according to plan, it will serve as an important baby step toward Musk's wider plan to send humans on a mission to the moon. However, spectators both on the ground and from afar won't be able to see much of the action

If the hop tests go according to plan, it will serve as an important baby step toward Musk's wider plan to send humans on a mission to the moon. However, spectators both on the ground and from afar won't be able to see much of the action

If the hop tests go according to plan, it will serve as an important baby step toward Musk’s wider plan to send humans on a mission to the moon. However, spectators both on the ground and from afar won’t be able to see much of the action

SpaceX spokesman James Gleeson confirmed to the Brownsville Herald that Starhopper had been moved to the launch pad in preparation for tests.

‘SpaceX will conduct checkouts of the newly installed ground systems and perform a short static fire test in the days ahead,’ Gleeson told the Brownsville Herald.

‘Although the prototype is designed to perform suborbital flights, or hops, powered by the SpaceX Raptor engine, the vehicle will be tethered during initial testing and hops will not be visible from offsite.’

During tests, Starhopper will be pumped with liquid methane and oxygen propellant and will use one of SpaceX’s powerful Raptor engines.

The prototype is expected to only lift a few feet off the ground, meaning it won’t be a true liftoff, but rather a brief hover.

A livestream has been set up by SPadre.com showing a view of the Starhopper prototype at the Boca Chica site.

The Brownsville Herald also reported that State Highway 4, which leads to Boca Chica Beach, is currently closed to the public in anticipation of the planned tests later today.

News of the hopper tests come after Musk tweeted earlier this week that Starhopper tests would ‘hopefully’ be held in the coming days.

Pictured is a separate component from the Starhopper prototype and what appears to be sections of a nosecone that could be installed on the Starship. Musk said the firm won't install a new nosecone on the hopper following an earlier incident

Pictured is a separate component from the Starhopper prototype and what appears to be sections of a nosecone that could be installed on the Starship. Musk said the firm won't install a new nosecone on the hopper following an earlier incident

Pictured is a separate component from the Starhopper prototype and what appears to be sections of a nosecone that could be installed on the Starship. Musk said the firm won’t install a new nosecone on the hopper following an earlier incident

Pictured is another view of the Starhopper prototype situated on the launch pad at SpaceX's Boca Chica test site. During tests, it will be pumped with liquid methane and oxygen propellant and will use one of SpaceX's powerful Raptor engines

Pictured is another view of the Starhopper prototype situated on the launch pad at SpaceX's Boca Chica test site. During tests, it will be pumped with liquid methane and oxygen propellant and will use one of SpaceX's powerful Raptor engines

Pictured is another view of the Starhopper prototype situated on the launch pad at SpaceX’s Boca Chica test site. During tests, it will be pumped with liquid methane and oxygen propellant and will use one of SpaceX’s powerful Raptor engines

Plans for the tests were first spotted in a SpaceX flyer posted on Reddit.

When asked whether the tests would begin this week, Musk replied in a tweet: ‘Hopefully. Always many issues integrating engine & stage. First hops will lift off, but only barely.’

Musk’s tweet seemed to suggest that the firm is currently working to integrate the Starhopper and its redesigned Raptor engine, which SpaceX unveiled for the first time in February.

The Starhopper test vehicle will feature one Raptor engine vs. the final Starship version, which is set to be packed with three powerful Raptor engines.

As part of its first test ‘hops,’ SpaceX will ensure that the Starship prototype and its Raptor engine can takeoff and land without any issues.

SpaceX was expected to conduct hop tests on Thursday, with a six-hour launch window opening at 10a.m. (CST) and lasting through 4p.m. (CST) but it was pushed back. Pictured above the Boca Chica test site near Brownsville, Texas, on Thursday

SpaceX was expected to conduct hop tests on Thursday, with a six-hour launch window opening at 10a.m. (CST) and lasting through 4p.m. (CST) but it was pushed back. Pictured above the Boca Chica test site near Brownsville, Texas, on Thursday

SpaceX was expected to conduct hop tests on Thursday, with a six-hour launch window opening at 10a.m. (CST) and lasting through 4p.m. (CST) but it was pushed back. Pictured above the Boca Chica test site near Brownsville, Texas, on Thursday

Starhopper will be pumped with liquid methane and oxygen propellant and will use one of SpaceX's powerful Raptor engines. The site is seen above on Thursday

Starhopper will be pumped with liquid methane and oxygen propellant and will use one of SpaceX's powerful Raptor engines. The site is seen above on Thursday

Starhopper will be pumped with liquid methane and oxygen propellant and will use one of SpaceX’s powerful Raptor engines. The site is seen above on Thursday

Musk added in a later tweet that the firm won’t build a new nosecone for Starhopper, after the device was damaged by a series of strong wind gusts at its Texas test site in January.

‘Don’t need it,’ Musk wrote. ‘What you see being built is the orbital Starship vehicle.’

Meanwhile, residents near SpaceX’s test site in Brownsville, Texas have been seeing flyers posted by the company alerting them to upcoming tests.

The flyer states that Starhopper tests could begin as soon as this week.

‘During those tests, SpaceX will establish a safety zone perimeter in coordination with local law enforcement,’ the flyer notes.

‘Signage will be in place prior to testing to alert the community of any temporary closures of Highway 4 and Boca Chica Beach.’

Elon Musk said SpaceX chose to omit a nosecone from the Starhopper prototype (pictured Wednesday) after it was toppled off of the spacecraft as a result of strong wind gusts earlier this year

Elon Musk said SpaceX chose to omit a nosecone from the Starhopper prototype (pictured Wednesday) after it was toppled off of the spacecraft as a result of strong wind gusts earlier this year

Elon Musk said SpaceX chose to omit a nosecone from the Starhopper prototype (pictured Wednesday) after it was toppled off of the spacecraft as a result of strong wind gusts earlier this year

Additionally, Musk showed off what will be a crucial element of the Starship rocket.

The SpaceX CEO posted a video demonstrating tests of the rocket’s heat shield, which will prevent it from burning up upon re-entry into the Earth’s atmosphere.

In doing so, the rocket is better equipped for immediate re-use.

‘Starship needs to be ready to fly again immediately after landing,’ Musk said in a tweet. ‘Zero refurbishment.’

The heat shield is made up of hexagonal-shaped tiles that are designed to keep out hot gas as the rocket returns to Earth’s surface.

Musk said the ‘white-hot’ sections reached a maximum temperature of 1650 Kelvin or 2,500 degrees Fahrenheit.

The tiles will be installed on the rocket’s ‘windward side’ and there’s ‘no shield needed on the leeward side,’ Musk added.

Plans for the tests were first spotted in a SpaceX flyer posted on Reddit (pictured). The flyer says the firm could begin tests of its Starhopper prototype rocket as soon as this week

Plans for the tests were first spotted in a SpaceX flyer posted on Reddit (pictured). The flyer says the firm could begin tests of its Starhopper prototype rocket as soon as this week

Plans for the tests were first spotted in a SpaceX flyer posted on Reddit (pictured). The flyer says the firm could begin tests of its Starhopper prototype rocket as soon as this week

SpaceX could soon begin tests of its Starship spacecraft (pictured). Elon Musk said the firm will 'hopefully' conduct the first test hops of SpaceX's Starship prototype, called Starhopper

SpaceX could soon begin tests of its Starship spacecraft (pictured). Elon Musk said the firm will 'hopefully' conduct the first test hops of SpaceX's Starship prototype, called Starhopper

SpaceX could soon begin tests of its Starship spacecraft (pictured). Elon Musk said the firm will ‘hopefully’ conduct the first test hops of SpaceX’s Starship prototype, called Starhopper

In January, the company revealed images of its fully-assembled Starship hopper test rocket.

‘This is for suborbital VTOL (vertical take-off and landing) tests,’ Musk said in a tweet last month.

‘Orbital version is taller, has thicker skins (won’t wrinkle) & a smoothly curving nose section.’

The model he shared is expected to be used for testing short launches and landings.

Musk hopes to conduct a manned mission with tourists to the moon by 2024.

Completing a successful mission to the moon would mark an incremental step in Musk’s other vision of traveling to Mars.

WHAT IS ELON MUSK’S ‘BFR’?

The BFR (Big F***ing Rocket), now known as Starship, will complete all missions and is smaller than the ones Musk announced in 2016.

The SpaceX CEO said the rocket would take its first trip to the red planet in 2022, carrying only cargo, followed by a manned mission in 2024 and claimed other SpaceX’s products would be ‘cannibalised’ to pay for it.

The rocket would be partially reusable and capable of flight directly from Earth to Mars.

Once built, Musk believes the rocket could be used for travel on Earth – saying that passengers would be able to get anywhere in under an hour.

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