Tesla CEO Elon Musk lost an appeal seeking to reverse part of a consent decree signed between Tesla and the Securities and Exchange Commission to settle civil securities fraud charges in 2018. .
The federal appeals court’s decision on Monday upheld an earlier ruling by the US District Court for the Southern District of New York that initially dismissed it.
Musk has been suing the SEC for years over the consent decree, which accuses the SEC of making “false and misleading” statements in a “financing” tweet in August 2018. Received and revised in 2019. Tesla’s CEO said he had found a buyer to take the automaker private for $420 a share, a claim later found false by a federal judge.
According to the ruling, the agreement required “prior approval” for Musk’s tweets containing informational material to Tesla, extending to “certain senior executives.”
Musk’s attorney Alex Spiro said in a February letter that the terms of the consent decree constitute an “unconstitutional” violation of Mr. Musk’s right to free speech.
However, the U.S. Court of Appeals for the Second Circuit dismissed those allegations, stating that the court “confirmed that the SEC used the consent decree to conduct a malicious harassment investigation into Mr. Musk’s protected speech.” We found no evidence to support the allegations.”
The court noted that the SEC has launched “only three investigations” into his tweets since 2018. Among them were his “financing” tweet, a tweet misrepresenting Tesla’s annual production numbers, and a Twitter poll in which Musk suggested selling a 10% stake in Tesla. , according to court filings.
The court said the investigation was far from being “malicious” and that “each tweet likely violated the terms of the consent decree.”
Musk’s attorneys also developed a Rule 60(b) argument that allows parties to reopen litigation if the law or circumstances change significantly. Musk’s legal team argued that the SEC’s enforcement methods made compliance “substantially more difficult.”
But the court also dismissed that claim, noting that Musk was only required to consult with Tesla’s general counsel or an in-house securities lawyer.
Mr. Musk’s Twitter activity has drawn the attention of both the SEC and shareholders.Musk It’s been found He was found “not responsible” in a securities fraud trial in February over his “securing funds” tweet. Musk is also trying to fend off lawsuits related to the public promotion of the Dogecoin cryptocurrency.
The court could also defend against the SEC charges or negotiate another settlement if Musk was concerned about SEC oversight of his “right to tweet without even limited internal oversight.” I added that I should have. “But he chose not to,” the court stressed.
The court concluded that “having made that choice, Mr. Musk’s team cannot insist that the final judgment be reopened incidentally simply because Mr. Musk changed his mind.”
“We seek further review and will continue to focus attention on the important issue of government censorship,” Musk’s attorney Spiro told CNBC in a statement.
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