Possible new Twitter owner Elon Musk still has some restrictions on his tweets that most of us don’t. They are the result of a 2018 settlement with the Securities and Exchange Commission (SEC) over his infamous “funding secured” tweet about taking Tesla private. Even considering Musk’s complaints that he was coerced into taking the deal and contempt of “bastards” at the SEC, earlier today, US District Judge. Reuters).
One of the things Musk wanted, but didn’t get, was for the court to stop an SEC subpoena for information to determine whether a tweet from last fall with a survey about selling 10 percent of his stock had been investigated first. , depending on the consent agreement you are in. Musk complained of an “endless investigation” that served as an attempt to “chill his exercise of First Amendment rights.”
Judge Liman ruled that the court could not review whether or not the subpoena had been properly issued, but also writes that if the court had ruled on the matter, the evidence presented showed that the “SEC clearly has a right to investigate the matter.” .
As for Musk’s request to rescind the consent decree, claiming it intrudes on his “First Amendment right to be free from prior restraints,” the judge did not buy his arguments, made through Eminem’s lyrics or otherwise. In addition to noting that “even Musk admits that his free speech rights do not allow him to engage in speech that is or may be considered fraudulent or otherwise violates securities laws,” the judge wrote:
Musk, by entering into the consent decree in 2018, agreed to the provision requiring prior approval of any written communication that contains, or reasonably may contain, informational material to Tesla or its shareholders. Now you can’t complain that this provision violates your First Amendment rights.
Musk’s other arguments similarly failed. As for his assertion that the “large number of lawsuits” were brought against him and his company as a result of the settlement, the judge ruled that the SEC’s three sets of investigations were “not surprising.” The same goes for his argument that he made the deal under “financial pressure.” Judge Liman writes that viewing it through the lens Musk’s lawyers presented would make settlements impossible to reach, as executives could simply claim they felt “forced,” forcing the government into costly lawsuits and eliminating an option. for the accused.
Musk was not forced to enter into the consent decree; rather, “for [his] own strategic purposes, [Musk], with the advice and assistance of counsel, entered into these agreements voluntarily, in order to secure the benefits thereof, including purpose.” Securities and Exchange Commission v. Conradt, 309 FRD 186, 187–88 (SDNY 2015). Musk can’t now try to back out of the deal he knowingly and voluntarily signed simply by lamenting that he felt he had to accept it at the time, but now, once the specter of litigation is a distant memory and his company has become, his estimation, almost invincible, wish he hadn’t.
Still, it wasn’t all bad in court today for Musk: The Delaware Supreme Court sided with him against Tesla shareholders who were suing over the company’s $2.6 billion acquisition of SolarCity in 2016. CNBC reports that a loss there could have cost him more than $2 billion, which certainly sounds like financial strain to most of us.
Update April 27, 7:33 pm ET: Added a note about SolarCity’s decision.