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Three-and-a-half years ago, Elon Musk was a bit annoyed. The short sellers insisting that Tesla wasn’t worth nearly as much as his adepts believed were really harshing his mellow and—as was his wont—Elon got a bit frisky on Twitter, making the demonstrably untrue claim that he had secured the $70 billion needed (and what a bargain in retrospect) to take the company private and make all those meanies like David Einhorn and Jim Chanos go away forever. After all, Elon Musk was a billionaire, and billionaires shouldn’t have to have their feelings hurt by people with marginally less money than them.

Of course, lying about that sort of thing when you are the chairman and CEO of a publicly-traded company is, in the Securities and Exchange Commission’s parlance, securities fraud. But this was Jay Clayton’s SEC, and Elon Musk was the only immigrant to whom he wasn’t married that President Trump liked, so it wouldn’t do to be too hard on him. Just pay $20 million, stop being chairman, get a babysitter and make sure you run your tweets by her, and we’ll forget the whole thing ever happened.

As anyone who knew anything about Musk must have realized at the time, even this would be too much for old Elon to stomach. And, of course, it was, not that Clayton & co. had much stomach for doing anything about it, even when Musk was deliberately inciting them.

All of which has Clayton’s successor Gary Gensler, whose patron is a bit less favorable toward Musk than was Clayton’s, and who himself a good deal less inclined to look favorably upon billionaire executives behaving badly, in rather a pickle.

Tesla said in a regulatory filing made public Monday that the SEC had sought information on “governance processes around compliance” with a settlement related to Mr. Musk’s 2018 tweet claiming to have secured funding to potentially take the electric-vehicle maker private…. The SEC has a few options if it believes Mr. Musk or Tesla violated the earlier settlement. Regulators could ask a federal judge to tear up the settlement, and they could renew their civil fraud lawsuit against him and the company.

Alternatively, the SEC could focus a new investigation on whether Tesla didn’t oversee Mr. Musk’s tweets as it told shareholders it would, Mr. Fagel said.

Suffice it to say, it seems unlikely the SEC will make the same mistake again.

The SEC’s ongoing friction with Mr. Musk shows the risk “of being overly creative” with an enforcement settlement, said Marc Fagel, a former head of the agency’s San Francisco office. The agency could have sought Mr. Musk’s removal as CEO when it resolved the civil fraud case, but didn’t pursue that punishment.

“The SEC chose some novel middle ground with a monitoring requirement, and I think what is going on shows the hazard in that,” Mr. Fagel said.

SEC Subpoenas Tesla Seeking Information Linked to Elon Musk Settlement [WSJ]

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