Elon Musk fails to resolve SEC ‘muzzle’ over tweets. On Monday, a federal appeals panel denied Elon Musk’s request to amend or stop his 2018 securities fraud settlement with the SEC, which required a Tesla Inc (TSLA.O) lawyer to approve some of his tweets.
Musk’s argument that the SEC used his consent decree to undertake bad-faith, harassing investigations that violated his First Amendment free expression rights was rejected by Manhattan’s 2nd U.S. Circuit Court of Appeals.
Musk’s ruling settled an SEC case accusing him of deceiving investors with an Aug. 7, 2018, tweet that he had “funding secured” to take his electric car firm private.
It necessitated pre-screening Tesla-related tweets. As a result, Musk resigned as chairman, and Tesla paid $20 million in civil fines.
Musk’s lawyers said the pre-approval mandate was a “government-imposed muzzle” that illegally restrained his expression in the appeal.
After the SEC began two more inquiries, the three-judge appeals court panel said Musk’s tweets “plausibly violated” the decree.
“Limited, appropriate inquiries in this case have not made compliance with the consent decree’substantially more onerous'” for Musk, the panel found.
Musk elected to screen his tweets and had no right to reconsider “because he has now changed his mind.”
Musk’s lawyer, Alex Spiro, said in an email, “We will seek further review and continue to bring attention to the important issue of the government constraint on speech.”
SEC said nothing.
Monday’s ruling upheld Manhattan U.S. District Judge Lewis Liman’s April 2022 ruling.
Liman characterized Musk’s reasoning as a “bemoaning” of requirements he no longer wished to follow now that Tesla had “become, in his estimation, all but invincible.”
SpaceX founder Musk bought Twitter for $44 billion in October. Forbes magazine ranks him second.
In February, a San Francisco jury acquitted Musk of investor losses from his “funding secured” tweet.
SEC v Musk, 2nd U.S. Circuit Court of Appeals, 22-1291.
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