SEC fights Elon Musk’s attempt to overturn ruling over Tesla tweets
The Securities and Exchange Commission has challenged Elon Musk’s attempt to stop a ruling that means lawyers have to check his tweets about Tesla.
In a letter to the US Court of Appeals for the Second Circuit in New York, SEC insists a lawyer is still needed to monitor and pre-approve Musk’s tweets.
The settlement was made from a controversy where Musk posted he had “funding secured” to take Tesla private, which never materialized.
Tesla shareholders then sued the billionaire as a stock value fall cost them billions of dollars.
It led SEC to charge Musk with civil securities fraud, which he settled by signing a revised consent decree in 2019.
The deal also required Tesla and Musk to pay $20 million fines, and the billionaire agreed to step down as Tesla Chairman for three years.
Musk agreed to a “Twitter sitter,” who would review and approve his tweets that may include critical business details about the company.
However, a court cleared Musk of the charges earlier this month, and Musk now wants the ruling rescinded.
Since the deal, Musk, and his attorney, Alex Spiro, have claimed that the SEC effectively intimidated Musk into signing it.
In a letter to that court in New York, Spiro cited a jury verdict in a separate shareholder class action suit that ended recently in a San Francisco court.
He argued to consider that ruling in the appeal.
Spiro and Musk told jurors at the shareholder class action trial that Tesla CEO did not break certain securities laws with his tweets in 2018.
“Musk waived his opportunity to test the Commission’s allegations at trial”
In its reply this week, the SEC argued that “Musk waived his opportunity to test the Commission’s allegations at trial when he voluntarily agreed (twice) to a consent judgment.”
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It also claims the ruling in San Francisco “says nothing about the continuing public interest in a negotiated settlement term that does not preclude Musk from tweeting accurately about Tesla or other topics.
“But rather requires Tesla to review Musk’s Tesla-related communications before publication, including through Musk’s Twitter feed — a communication channel designated by Tesla for disclosure.”
The SEC lawyers also questioned the legal basis for reconsidering the settlement after all these years.
The appeal is scheduled for oral argument this spring, but no final date has yet been set.