If you were to believe his recent tweets, poor Elon Musk is perhaps the world’s richest victim of bullying. In February, the chief executive of Tesla accused the US Securities and Exchange Commission (SEC) of harassing him and his company with “endless” investigations in retaliation for his vocal opinions of regulators.
“The SEC seems to be targeting Mr Musk and Tesla for unrelenting investigation largely because Mr Musk remains an outspoken critic of the government,” Alex Spiro, a lawyer for the South African billionaire and his company wrote in a letter last month.
The letter, filed to the US district judge who oversaw a previous settlement between Tesla and the SEC, said the agency’s “outsized efforts seem calculated to chill his exercise of First Amendment rights.”
The accusations come as Musk faces increased scrutiny over his social media posts; allegations of worker discrimination and animal abuse at his companies; and recalls of Tesla vehicles.
While the court will need to weigh in on whether Musk is indeed being unfairly targeted, it is undeniable that his companies have been slapped with a staggering number of legal and regulatory actions in recent months. Here are some of his biggest problems of late.
All atwitter
The letter Musk sent in February came days after Tesla disclosed it had been subpoenaed in November by the SEC. The agency has reportedly requested more information on Musk’s compliance with a 2018 settlement.
That suit was filed after Musk tweeted in 2018 that he had “funding secured” to take Tesla private at $420 per share – when, according to the SEC, he did not. As a result of the settlement, Musk and Tesla were required to pay $20m each in civil fines and Musk stepped down as chairman of the board.
As part of the agreement, Musk would also need to submit any future tweets that may impact Tesla’s stock price to company lawyers for vetting. The new subpoena – filed just 10 days after Musk polled his Twitter followers on whether he should sell 10% of his Tesla stake, triggering a sell-off – argues that has not been the case.
Yesterday Musk asked a district judge to terminate the agreement and block the SEC’s subpoena. His lawyers said the 2018 consent decree resolving SEC securities fraud charges should not allow “roving and unbounded investigations” into the Tesla CEO, while impeding his constitutional right to free speech.
“The SEC’s pursuit of Mr Musk has crossed the line into harassment, which is quintessential bad faith,” Musk’s lawyers wrote to US District Judge Alison Nathan in Manhattan.
The tweeted poll sent Tesla shares falling and set off a new series of problems for Musk, including an investigation of him and his brother Kimbal Musk over insider-trading allegations. According to a filing, Kimbal sold $108m Tesla shares just days before Musk’s tweet, leading officials to investigate whether he was told about it in advance.
In response, Musk tweeted that he was “building a case”.
“I didn’t start the fight,” he said on Twitter, “but I will finish it.”
These are not Musk’s only social media struggles: his Twitter account, which has 77m followers, has long been a source of drama. In 2019 he faced trial for defamation relating to tweets he made about a British cave diver; he was ultimately exonerated.
In March 2021 an investor sued Musk and the company, accusing them of violating the SEC agreement regarding his tweets, and a second lawsuit was filed later in the year on behalf of a number of Tesla shareholders, who said Musk’s tweets had caused “billions of dollars in losses”.
That suit also addresses Musk’s recent Twitter feud with Senator Elizabeth Warren, the Massachusetts Democrat, which allegedly drove down the stock price another 9.6% in December.
“Musk remains undeterred and continues to post on Twitter and social media on matters that are material to Tesla and its stockholders, and which ultimately have an impact on Tesla’s stock prices,” the suit says.
Case in point
Besides attempting to outrun attacks from financial regulators and investors, Musk is being targeted by his own employees over working conditions in Tesla factories and offices.
Tesla was served in February with a comprehensive discrimination suit from California’s Department of Fair Employment and Housing on behalf of dozens of workers in its flagship Fremont, California, plant.
Experts say the lawsuit is likely to succeed and could result in structural changes to how the company works. (Tesla has called the action “misguided”.) It comes after a separate employee from the same plant was awarded $137m over racial discrimination – a settlement the company is still trying to have thrown out.
“When a single worker sues Tesla, the company may be motivated to sweep the allegations under the rug. But here, the potential for actual, systemic change is much greater,” said Veena Dubal, labour law professor at the University of California, Hastings College of the Law.
Meanwhile six women have sued the company over sexual harassment in its factories, which two of them described as “rampant”.
Actions-reactions
Tesla is reportedly facing at least five lawsuits from customers who claim defective vehicles led to accidents. In February the family of a Florida man who died in a car accident filed a civil suit against the company, saying the suspension system in his Tesla vehicle failed and caused the fatal crash.
In a separate lawsuit filed in February, another Tesla customer claimed that the defective self-driving technology on his Tesla Model 3 caused the vehicle to run into a stationary fire truck, killing his wife. That complaint said the National Highway Traffic Safety Administration (NHTSA) is aware of at least 12 incidents in which Tesla’s software failed to react to emergency vehicles with flashing lights.
Musk has previously tweeted: “Tesla with Autopilot engaged now approaching 10 times lower chance of accident than average vehicle.”
In late 2021 and early 2022 Tesla issued 10 US recalls over four months, some under pressure from the NHTSA.
What will actually come of this?
While the list of legal actions taken against Musk and Tesla grows almost unbelievably long, the company’s bottom line has shown shockingly limited response, posting record profits in recent earnings reports.
The company’s recent success in the face of both legal difficulties and industry-wide struggles with supply chain concerns and shortage show Tesla’s resilience, said Haris Anwar, senior analyst at Investing.com.
“With Tesla in high-growth mode and producing record earnings, investors will ignore the latest regulatory action at this initial stage unless it snowballs into something more significant,” he said.
