Home » US business news » Elon Musk urges Supreme Court to undo SEC’s “Twitter sitter” deal

Elon Musk urges Supreme Court to undo SEC’s “Twitter sitter” deal

By Nithya Bose in US business news, posted December 9, 2023

Elon Musk is trying to undo a deal that requires a "Twitter sitter" to review and approve his Tesla-related tweets.

The billionaire has petitioned the US Supreme Court to overturn the settlement agreement with the Securities and Exchange Commission (SEC).

Musk's attorneys argue this provision infringes on his free speech rights and said he was coerced to agree to "unconstitutional conditions."

The provision is part of the SEC settlement over a 2018 securities fraud charge related to Musk's tweets.

The SEC had charged Musk after he tweeted about having "funding secured" to take Tesla private at $420 per share.

Trading in Tesla was briefly halted, and the shares experienced volatility.

The settlement, agreed in 2019, included the provision that requires pre-approval of Musk's Tesla-related tweets by a company lawyer or the designated "Twitter sitter."

Musk and Tesla have since been under continued SEC investigation to ensure compliance with the settlement terms.

Musk's legal team contends the provision restricts Musk's speech, even when accurate.

They also say the ruling extends to topics unrelated to the SEC's civil action against him.

They argue the ongoing threat of contempt, fines, or imprisonment for otherwise protected speech creates a chilling effect.

Elon Musk, who acquired Twitter in 2022 and renamed it X, says the settlement's constraints on his speech are unwarranted, even as he serves as the company's chairman and chief technology officer.

Legal experts: Musk is making a "swing for the fences"

Legal experts view Musk's move as a strategic attempt, characterized as a "swing for the fences," particularly given that a circuit court has already rejected his appeal.

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Musk would need support from four of the nine justices to secure a Supreme Court hearing.

The legal maneuver centers on the "unconstitutional conditions" doctrine, typically applicable when the government offers general public benefits.

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As of now, the SEC has not responded to Musk's petition.

Concurrently, Tesla investors have filed a separate lawsuit against Musk and the company.

It's regarding the impact of Musk's "funding secured" tweets on the stock price.

While a San Francisco federal court jury found Musk and Tesla not liable in February, shareholders have appealed to the 9th Circuit.

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