Elon Musk will be legally compelled to run some messages past his Tesla “Twitter sitter” even though he is on the cusp of becoming the owner of Twitter.
US District Judge Lewis J. Liman rejected a request to amend the conditions of Musk’s agreement with the US Securities Exchange Commission, which was put in place after Musk’s now-famous “funding secured” tweet in 2018.
Musk wanted the SEC’s subpoena to investigate Tesla’s compliance with its investigations annulled, as well as the agreement that a corporate lawyer would pre-approve any public statements by Musk that investors might consider significant (particularly on Twitter).
Musk has been particularly vociferous about what he has termed as a harassment campaign by the SEC, primarily the San Francisco field office.
Judge Liman, on the other hand, dismissed the allegations, citing the SEC’s broad enforcement jurisdiction as well as Musk’s alleged breaches of the agreement.
“Musk may wish it were otherwise,” he said, “but he is subject to the same enforcement authority as any other citizen, and he has the same means to challenge the exercise of that authority.” “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.”
Musk invoked the First Amendment in his desire that his public utterances about Tesla no longer be subject to review by a company lawyer, claiming that the consent decree amounted to an unreasonable prior limitation on his protected speech.
Musk further claimed that the SEC was misusing the regulation by harassing him and conducting irrational investigations into his company. (The agreement only applies to material facts about Tesla’s financial status that would normally necessitate an 8-K filing with the Securities and Exchange Commission.)
That line of reasoning irritated Judge Liman, who called it “meritless and, in this case, particularly ironic.”
In the course of settlements, defendants not only commonly relinquish portions of their fundamental rights, such as free expression and due process.
