Tesla CEO Elon Musk and the company’s Board were sued in Delaware Chancery Court on Friday by a private investor, and not the U.S. Securities and Exchange Commission (SEC).
According to the lawsuit, the investor accuses Musk of sending “erratic” tweets in violation of a 2018 settlement with the SEC. The investor also blames the company’s Board for not restraining his online behaviour.
In 2018 Musk agreed to settle with the SEC after the government agency took issue with his now infamous “funding secured” tweet. As part of the agreement Musk had to pay a $20 million fine. Tesla also had to pay $20 million and agree to take on new oversight procedures in relation to Musk’s tweets.
Despite the settlement the investor claims Musk has “continued to issue tweets without the required pre-approval.” This has resulted in “substantial damage” to Tesla and “billions of dollars in lost market capitalization,” the plaintiff alleges.
Shares of Tesla (TSLA) dropped shortly after news of the lawsuit broke, with many thinking it was the SEC taking action against Musk and Tesla. The stock is trading down 1.47% at $689.29 at the time of publication.