On May 15, 2023, a US federal appeals court dismissed Tesla CEO Elon Musk’s attempt to alter or annul his 2018 securities fraud settlement with the US Securities and Exchange Commission (SEC). This arrangement necessitates the approval of certain Musk tweets by a Tesla Inc lawyer beforehand.
Musk had alleged that the SEC used his consent decree to carry out unjust, harassing investigations infringing on his First Amendment free speech rights as prescribed by the US Constitution. However, the 2nd US Circuit Court of Appeals in Manhattan ruled against Musk’s assertions.
The decree, which settled an SEC lawsuit that accused Musk of defrauding investors with a tweet claiming “funding secured” to privatize his electric car company, calls for preemptive scrutiny of Musk’s tweets potentially containing material information about Tesla.
As part of this settlement, both Musk and Tesla each disbursed US$20 million in civil fines. Moreover, Musk relinquished his chairmanship at Tesla.
The appeal saw Musk’s attorneys label the pre-approval requirement a “government-imposed muzzle,” akin to an unlawful prior restraint on Musk’s speech. However, the three-judge appeals court panel countered, noting that the SEC had initiated only two subsequent enquiries into Musk’s tweets, which feasibly breached the terms of the decree.
The panel further explained that Musk willingly accepted his tweets’ monitoring and was not entitled to reexamine the matter due to a change of heart.
Musk’s attorney, Alex Spiro, expressed his intent to seek further review and continue highlighting the crucial issue of government restraint on speech. Meanwhile, the SEC has refrained from commenting.
This ruling reaffirms a decision made in April 2022 by US District Judge Lewis Liman in Manhattan. He referred to Musk’s arguments as complaints about requirements that he no longer wished to abide by, given Tesla’s nearly invincible status in his view.
Despite the legal wrangling, Musk continues to lead the electric vehicle industry, with his wealth and influence extending to social media and space exploration. He purchased Twitter for US$44 billion in October and helms SpaceX, the renowned rocket and spacecraft manufacturer. As per Forbes magazine, he is the world’s second-richest person.
A San Francisco jury declared Musk not liable for investor losses tied to his controversial “funding secured” tweet in February.
This case continues as SEC vs. Musk in the 2nd US Circuit Court of Appeals, No. 22-1291.
This news is based on the report by asiaone.