Elon Musk must continue to have his Tesla tweets checked before posting
A judge ruled that he can't get out of his 2018 SEC deal.
Elon Musk won't be able to get out of his agreement requiring oversight of his tweets about the company, Bloomberg reported. A judge has rejected his request to drop the 2018 deal made with the US Securities and Exchange Commission (SEC) that required a company lawyer approve any Tesla-related tweets. The judge also denied Musk's request to block an SEC subpoena related to possible insider trading.
"Musk cannot now seek to retract the agreement he knowingly and willingly entered by simply bemoaning that he felt like he had to agree to it at the time but now — once the specter of the litigation is a distant memory and his company has become, in his estimation, all but invincible — wishes that he had not," US District Judge Lewis Liman wrote.
Musk may wish it were otherwise, but he remains subject to the same enforcement authority — and has the same means to challenge the exercise of that authority — as any other citizen.
After Musk tweeted in 2018 that he had "funding secured" to take Tesla private at $420, the SEC sued saying that Musk had misled investors. The parties eventually settled, with Musk and Tesla agreeing to pay $20 million each and require lawyers to review Musk's Tesla-related tweets.
However, last month Musk asked a federal court to terminate the deal, saying he felt "forced" to sign the consent decree during a period when Tesla's financial health was at risk. A self-described "free speech absolutist," he also claimed through his lawyer that the deal impinged on his his First Amendment rights.
The judge also denied Musk's request to quash an SEC subpoena related to a Twitter poll he conducted asking users whether he should sell Tesla shares or not. Officials were concerned he might have told his brother Kimbal about the poll, leading the brother to sell 88,500 shares just a day before the November 6th, 2021 tweet. In response, Musk said that the Twitter poll in question was just meant to gather input and not a disclosure of information he'd have to report to the SEC.
"Musk may wish it were otherwise, but he remains subject to the same enforcement authority — and has the same means to challenge the exercise of that authority — as any other citizen," Liman wrote. "Indeed, to conclude otherwise would be to hold that a serial violator of the securities laws or a recidivist would enjoy greater protection against SEC enforcement than a person who had never even been accused of a securities law violation."
In response, Musk's lawyer Alex Spiro said that the court's ruling still means he can address SEC subpoenas on a case-by-case basis. "The court is simply saying we can move to quash these subpoenas when they are compelled," he told Bloomberg. "Nothing will ever change the truth, which is that Elon Musk was considering taking Tesla private and could have — all that’s left some half decade later is remnant litigation which will make that truth clearer and clearer."