Judge Overturns Elon Musk’s Attempt to End SEC Settlement Over Tesla Tweets – TechCrunch

Elon Musk’s attempt to end a 2018 settlement with the US Securities and Exchange Commission that requires oversight of some of his Tesla-related tweets has failed.

U.S. District Judge Lewis Liman on Wednesday denied a motion by Musk’s lawyers to end the 2018 consent decree over allegations that the SEC had misused it to “launch a never-ending, no-holds-barred investigation” of the speech. of Musk and meddling with his First Amendment right to free speech. Musk’s lawyers also argued that the consent decree was “extracted from Musk through the exercise of economic coercion.” Musk recently mentioned this point during a TED Conference interview saying he was forced to agree to the SEC deal to save Tesla, noting that it was “like having a gun to your child’s head”.

In his decision, Liman said that “none of these arguments are valid.”

“Musk’s argument that the SEC used the consent decree to harass him and initiate investigations into his speech is also without merit, and in this case particularly ironic,” Liman wrote in his ruling. “Musk could hardly have thought that the moment he entered the decree, he would be immune from non-public investigations by the SEC.”

The judge also denied Musk’s motion to overturn certain parts of an SEC subpoena issued in February for documents to determine whether two tweets about his Tesla stock sale were pre-approved by the company’s general counsel or the securities board.

History SEC vs Musk

The SEC alleged in a complaint filed in September 2018 that Musk lied when he tweeted on Aug.

The complaint was filed after Musk and Tesla’s board abruptly walked away from a settlement with the SEC. Not only did the board back out of the deal, it issued a bold statement of support for Musk after the charges were filed.

A deal was eventually reached anyway with harsher penalties than the original deal. Musk agreed, in the agreement reached on Sept. 29, to step down as Tesla’s chairman and pay a $20 million fine. Tesla also agreed to pay a separate $20 million fine, according to the SEC. The SEC said the charge and fine against Tesla is for failing to require disclosure controls and procedures related to Musk’s tweets.

But drama with the SEC soon bubbled up again when Musk tweeted to his 24 million followers previously unknown material information that Tesla would produce “about” 500,000 cars this year. He corrected himself hours later to clarify that he meant the company would be producing at an annualized rate of 500,000 vehicles by the end of the year.

The SEC tried to hold him in contempt for violating the 2018 settlement. A judge in that dispute demanded that Tesla, Musk and the SEC settle their differences and reach a new resolution. A settlement was reached in April 2019 that gave Musk the freedom to use Twitter — within certain limitations — without fear of being held in contempt for violating a previous court order.

Musk can tweet as he pleases, except when it comes to certain events or financial milestones. In such cases, Musk must seek pre-approval from a securities attorney, according to the settlement filed in federal court in Manhattan.

The relationship with the SEC soared again last year after Musk tweeted a survey in November 2021 asking his Twitter followers whether to hold or sell Tesla stock. That tweet prompted the SEC to issue a subpoena for documents showing that Musk had received pre-approval of the tweet.

Leave a Reply

Your email address will not be published.