(Reuters) – The top rated U.S. securities regulator received permission from a federal judge on Tuesday to respond to Tesla Inc Chief Executive Elon Musk’s arguments that his Twitter post about the electric automobile maker’s production volume did not violate his current fraud settlement.

FILE PHOTO: SpaceX founder Elon Musk appears on at a post-launch news conference immediately after the SpaceX Falcon 9 rocket, carrying the Crew Dragon spacecraft, lifted off on an uncrewed test flight to the International Space Station from the Kennedy Space Center in Cape Canaveral, Florida, U.S., March two, 2019. REUTERS/Mike Blake

The U.S. Securities and Exchange Commission has till March 19 to file a short, and U.S. District Judge Alison Nathan gave each parties till March 26 to request an evidentiary hearing.

The SEC had asked the court to hold Musk in contempt, saying his Feb. 19 tweet violated a September fraud settlement barring him from sharing material info about Tesla on social media with no the company’s preapproval.

The renewed public battle among Tesla’s chief executive and the SEC adds stress on Musk, the public face of Tesla, who is struggling to make the firm lucrative immediately after cutting the cost of its Model three sedan to $35,000.

On Monday, Musk argued in a filing that his “single, immaterial” tweet to his a lot more than 24 million Twitter followers claiming the electric automobile-maker would generate about 500,000 automobiles in 2019 did not violate that agreement.

Lawyers for Musk stated the tweet complied with the company’s communication policy for senior executives and was a “proud and optimistic restatement of publicly disclosed info.”

Musk corrected his tweet 4 hours later to say that the “annualized production rate” at year-finish 2019 would in all probability be about 500,000, with deliveries anticipated to be about 400,000.

The settlement among Musk, Tesla and the SEC resolved an SEC lawsuit more than claims Musk created on Twitter in August that he had “funding secured” to take Tesla private at $420 per share. The SEC named these tweets “false and misleading,” and a deal to go private in no way materialized.

Immediately after the settlement, Musk named the regulator the “Shortseller Enrichment Commission” on Twitter and tweeted that “something is broken with SEC oversight” just a single day immediately after the agency began pursuing the contempt order.

Tesla shares completed Tuesday down two.six % at $283.36 on the Nasdaq.

Reporting by Jan Wolfe in Washington Added reporting by Jonathan Stempel in New York Writing by Lisa Shumaker Editing by Jonathan Oatis and Sonya Hepinstall

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