A federal judge in Manhattan will spend the afternoon Thursday considering Elon Musk’s February Twitter post that the SEC claims is beyond the pale. More fines, restrictions on Musk’s social media use and even his control of Tesla Inc. are at stake.

Lawyers for the U.S. Securities and Exchange Commission and Musk are set to argue over whether U.S. District Judge Alison Nathan should find him in contempt for the tweet about Tesla’s vehicle production. The regulator claims Musk violated a US$40 million settlement with the SEC that was supposed to have resolved a lawsuit over an earlier batch of tweets in which he suggested he’d take the company private.

Here’s what the SEC will argue:

  • Musk violated a provision in the September settlement requiring him to get internal approval for tweets that could contain "material information."
  • In his Feb. 19 tweet, Musk misleadingly told his Twitter followers that Tesla would build 500,000 cars in 2019.
  • Musk, who the SEC said didn’t get approval to publish Feb. 19 post, hasn’t "diligently attempted" to comply with the pre-screening requirement.

Musk’s defense:

  • The Feb. 19 tweet didn’t contain any material information and was consistent with earlier company disclosures.
  • The SEC’s interpretation of the settlement would violate Musk’s Constitutional right to free speech.
  • Musk has diligently attempted to comply with the settlement agreement by "dramatically" reducing his tweets about Tesla.
  • The SEC’s effort to seek sanctions against Musk follows his criticism of the regulator on "60 Minutes" and "reflects concerning and unprecedented overreach on the part of the SEC."

Here’s what we know will happen:

  • Nathan, who was appointed to the bench by former President Barack Obama, may rule immediately after hearing arguments, but more likely will consider the claims and issue a written ruling later.
  • If Nathan finds Musk in contempt, she’ll consider what punishment to impose to try to get the CEO to comply with the settlement. That could include new fines, new limits on his Twitter habit and even a temporary or permanent ban on Musk serving as an officer or director of Tesla or any other public company.
  • Some experts say Nathan probably won’t ban Musk from running the company or impose other punishment the would unduly harm Tesla shareholders.

What we don’t know:

  • Will Musk attend the hearing? He’s not required to and is probably well-advised to leave the arguments to his lawyers. But Musk isn’t exactly publicity-shy and he may want to tell his side of the story in his own words.
  • How will Nathan rule? It’s possible she’ll tip her hand during the hearing, but more likely she’ll just ask questions to get a clearer grasp of the arguments.