The US Securities and Exchange Commission (SEC) says Tesla CEO Elon Musk still needs to get prior approval from lawyers before tweeting Tesla-related information.
The SEC drafted its renewed position this week in a letter to the United States Court of Appeals for the Second Circuit in New York, arguing that an earlier settlement agreement between the agency and Musk is fully constitutional and valid.
In 2018, Musk tweeted that he had “funds secured” to take Tesla private for $420 a share and that investor support for the deal was confirmed. Tesla’s stock price fluctuated in the weeks that followed, prompting an SEC investigation into whether Musk had committed securities fraud.
Musk and Tesla settled without admitting wrongdoing. They each paid $20 million in fines, Musk resigned as Tesla chairman and agreed to pass most Tesla-related communications through a lawyer before tweeting, lest he say anything that would affect the stock price.
In September 2022, Musk’s lawyers filed a brief with an appeals court to release the executive from a “government-imposed gag” that “inhibits[s] and relax[s] The legitimate speech of Mr. Musk”. This was a month after a federal judge struck down Musk’s motion to end the same SEC liquidation provision.
Earlier this week, Musk’s lawyers argument that a recent jury verdict in a separate trial should be considered on appeal. In early February, Musk was found not liable for securities fraud in a class action lawsuit in which shareholders who lost money after Musk tweeted “funding secured” sued the executive for damages.
“In light of the jury’s conclusion that Mr. Musk’s tweets did not violate Rule 10b-5the SEC lacks support for both the consent decree itself and for their arguments on appeal”, writes Spiro. “The verdict provides yet another reason why the public interest in avoiding unconstitutional settlements easily subsumes the alleged SEC involvement in the consent decree.”
Lawyers may present supplementary authority to an appellate court after filing a brief and before the court makes a decision if they find new legal authority that is directly related to the issue raised in the appeal and has the potential to affect the outcome. of the case.
The SEC rejected Spiro’s argument, saying a jury verdict in a private securities fraud action does not qualify as “relevant and significant” authority. The agency also argued that Musk “gave up his opportunity to prove the Commission’s allegations at trial when he voluntarily agreed (twice) to a consent trial.”
The agency argued that the verdict does not address the public interest involved in the negotiated settlement and does not prevent Musk from accurately tweeting about Tesla or other topics. SEC lawyers also questioned the legal basis for undoing the deal years later.
The court can accept Spiro’s letter or cancel it. Oral argument on the appeal is expected in the spring, but no date has been set.
