The US markets watchdog reprimanded electric vehicle maker Tesla and its billionaire chief executive Elon Musk in May last year for allegedly violating the terms of a 2019 "court-ordered policy" agreement stipulating that his tweets should be approved by the company's lawyers, according to a report.
The US Securities and Exchange Commission pointed to tweets by Mr Musk in 2019 and 2020 discussing the company's share price and its solar roof production figures as examples of communications that had not received the required pre-approval, the Wall Street Journal said in its report.
"Tesla has abdicated the duties required of it by the court's order," a memo signed by Steven Buchholz, a senior SEC official in its San Francisco office, said. WSJ obtained the document under a federal Freedom of Information Act request.
The California-based company failed “to enforce these procedures and controls despite repeated violations by Mr Musk”, it added.
In a tweet on May 1 last year, Mr Musk said that Tesla’s stock price was “too high”. This eventually led to a more than $13 billion decline in the company’s market value.
The court-ordered policy was introduced after Mr Musk tweeted in August 2018 that he had "funding secured" to potentially take Tesla private in a $72bn deal. Following this, the SEC ordered the company to check any public statement related to Tesla that Mr Musk makes.
According to the 2018 agreement, Mr Musk needed approval from an attorney on any Tesla-related tweet that contains material company information prior to posting them.
Mr Musk and Tesla each paid $20 million to settle that case and agreed to the oversight of his tweets, the WSJ said.
Tesla, which dissolved its public relations department in October, relies on social media – largely Twitter – to make new announcements.
Mr Musk, who has 56.3 million followers on Twitter, has made a number of company announcements on the social media platform, including the company’s move to drop the usage of Bitcoin and new features of its cars. Tesla's own account has 10 million followers.