Elon Musk loses bid to end SEC 'muzzle' over tweets
Commission, saying the Tesla Inc chief executive had not shown "good cause" for a change. Elon Musk is not allowed to modify or end his 2018 securities fraud settlement with the U.S. Securities and Exchange Commission because he has not shown "good cause" for a change, according to a federal appe
Jonathan Stempel
The 2nd U.S. The 2nd U.S. Circuit Court of Appeals rejected Musk's claims that the SEC had exploited Musk's consent decree in order to conduct harassing, bad-faith investigations which violated his First Amendment rights of free speech under the U.S. Constitution.
Musk's order resolved a SEC lawsuit accusing Musk of defrauding his investors by tweeting on Aug. 7, 2018 that he 'had funding secured' for taking his electric car company to private.
The tweets that could contain important information about Tesla had to be reviewed in advance. Musk and Tesla paid civil fines of $20 million each, and Musk resigned as chairman.
Musk's attorneys called the mandate for pre-approval a "government-imposed muzzle" that was an illegal restraint of his speech.
The three-judge panel of the appeals court said that the SEC opened only two inquiries after Musk's tweets and that those tweets had 'plausibly' violated the decree.
The panel stated that the SEC’s ‘limited, appropriate investigations in this case’ have not made Musk’s compliance with the consent order'substantially harder', as Musk had claimed.
The report also stated that Musk had chosen to allow screening his tweets and that he was not entitled to revisit the issue 'because he now has changed his mind'.
Alex Spiro is a lawyer who represents Musk. He said, in an email, that he would seek a further review of the issue and continue to draw attention to it.
The SEC refused to comment.
The ruling of U.S. district judge Lewis Liman, Manhattan, in April 2022 was upheld by the decision on Monday.
Liman said Musk's arguments were a bemoaning of requirements that he did not want to adhere to anymore now that Tesla 'had become, in his opinion, all but unbeatable'.
Musk is the owner of SpaceX, a rocket and spacecraft company. He bought Twitter in October for $44 billion. Forbes magazine says he is the second richest person in the world.
In February, the jury in San Francisco found that Musk was not responsible for any investor losses resulting from his tweet stating "funding secured".
SEC v Musk is the case. Circuit Court of Appeals No. 22-1291.
Jonathan Oatis, Jonathan Stempel and Jonathan Stempel (New York):