Musk accuses SEC of unlawfully muzzling him | Business and Economy News

Musk needs pre-approval before tweeting about Tesla, a requirement he calls a ‘government-imposed gabion’.

US securities regulators are illegally hunting down Tesla CEO Elon Musk, violating his freedom of speech by repeatedly trying to enforce a 2018 securities fraud deal. argued in a brief trial.

The document, filed late Tuesday in federal appeals court in Manhattan, is written to support Musk’s appeal of a lower court’s April decision to uphold his agreement with the Securities and Exchange Commission. Transaction.

The summary says that a provision in the agreement that requires Musk to get pre-approval before tweeting about the electric car company is an “unlawfully government-imposed muzzle over his speech.” Mr. Musk before it was implemented.”

The settlement requires his tweets to be approved by a Tesla attorney before being published. The SEC is investigating whether Musk violated the agreement with his tweets last November asked Twitter followers if he should sell 10% of his Tesla stock.

But in a nutshell, Musk’s attorney, Alex Spiro, argues that the SEC is continually investigating Musk on topics not covered in the settlement. It asked the Second Circuit Court of Appeals to strike or amend the pre-approval clause

“The pre-approval provision in the consent decree qualifies as an advance restriction on First Amendment violation speech,” Spiro wrote. “It prohibits future legal speech on a wide range of topics without consent.”

Furthermore, Musk’s speech was chilled by the threat of an SEC investigation and prosecution for contempt of court, the summary said.

The entire dispute stems from an October 2018 agreement with the SEC that Musk signed. He and Tesla each agreed to pay $20 million in civil penalties for Musk’s tweets about having “Funding Guaranteed” to Take Tesla Private at $420 per share.

Funding is far from locked up and the electric-car company is still public, but Tesla’s stock price has skyrocketed. The settlement specified governance changes, including Musk’s dismissal as chairman of the board, as well as pre-approval of his tweets.

In April, U.S. District Judge Lewis Liman in New York rejected Musk’s attempt to dismiss the settlement he signed with the SEC. He also rejected Musk’s request to rescind subpoenas seeking information about possible violations of the settlement.

Limon’s ruling said that Musk made the tweets without prior approval, but the judge later wrote that he did not intend to pass judgment on that matter.

The SEC would not comment on Wednesday.

In his court summary, Spiro said Musk’s waiver of his First Amendment rights in the settlement was involuntary because there was no way for Musk to know how far it had come. “The provision applies to future speech about circumstances no one could have foreseen,” he wrote.

Musk, he said, is under constant threat that the SEC will disagree with his interpretation of what he might say. Musk also agreed to the settlement as Tesla was a smaller company and the SEC’s actions could jeopardize their finances.

“The SEC has maintained ongoing investigations into Mr. Musk’s speech, using silly interpretations of the consent decree that appear to be designed to restrain and chill his future speech. All of this is related to speech that is completely unrelated to the 2018 tweet that the SEC initiated this action,” Spiro wrote.

Tesla is currently the most valuable car manufacturer in the world and Musk is the richest person in the world.

Liman ruled that Musk’s claim that economic pressure led him to sign the deal was “totally unconvincing.”

Even if Musk worries that litigation with the SEC will financially ruin Tesla, “it doesn’t provide a basis for him to get out of the sentence he voluntarily signed,” Liman wrote.

The judge also said Musk’s argument that the SEC used a settlement order to harass Musk and launch investigations was “futile”.

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