In court brief, Musk says the SEC is unlawfully muzzling him

Sep 27, 2022, 11:14 PM | Updated: Sep 28, 2022, 3:00 pm
FILE - Tesla and SpaceX Chief Executive Officer Elon Musk speaks at the SATELLITE Conference and Ex...

FILE - Tesla and SpaceX Chief Executive Officer Elon Musk speaks at the SATELLITE Conference and Exhibition in Washington. A Delaware judge is hearing arguments, Tuesday, Sept. 27, 2022 over the exchange of information by lawyers in Twitter's lawsuit seeking to force billionaire Elon Musk to carry through with his $44 billion acquisition of the social media giant. (AP Photo/Susan Walsh, File)

(AP Photo/Susan Walsh, File)

DETROIT (AP) — U.S. Securities regulators are unlawfully muzzling Tesla CEO Elon Musk, violating his free speech rights by continually trying to enforce a 2018 securities fraud settlement, Musk’s lawyer contends in a court brief.

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

The brief says that a provision in the settlement requiring Musk to get prior approval before tweeting about the electric car company is an illegal “government-imposed muzzle on Mr. Musk’s speech before it is made.”

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

But in the brief, Musk attorney Alex Spiro contends that the SEC is continually investigating Musk for topics not covered by the settlement. It asks the Second Circuit Court of Appeals to strike or modify the prior approval provision.

“The pre-approval provision in the consent decree qualifies as a prior restraint on speech that runs afoul of the First Amendment,” Spiro wrote. “It forbids future lawful speech on a range of topics absent approval.”

Further, Musk’s speech is chilled by the threat of SEC investigations and prosecution for contempt of court, the brief said.

The whole dispute stems from an October 2018 agreement with the SEC that Musk signed. He and Tesla each agreed to pay $20 million in civil fines over Musk’s tweets about having the “funding secured” to take Tesla private at $420 per share.

The funding was far from locked up, and the electric vehicle company remains public, but Tesla’s stock price jumped. The settlement specified governance changes, including Musk’s ouster as board chairman, as well as pre-approval of his tweets.

In April, U.S. District Judge Lewis Liman in New York rejected Musk’s bid to throw out the settlement that he signed with the SEC. He also denied a motion to nullify a subpoena of Musk seeking information about possible violations of the settlement.

Limon’s ruling said that Musk made the tweets without getting pre-approval, but the judge later wrote that he didn’t mean to pass judgment on that issue.

The SEC wouldn’t comment on Wednesday.

Spiro writes that Mr. Musk’s waiver of his First Amendment rights in the settlement was not voluntary because there was no way for Musk to know how far reaching it was. “The provision applies to future speech about circumstances no one could anticipate in advance,” he wrote.

Musk, he said, is under constant threat that the SEC will disagree with his interpretation of what he can say. Musk also agreed to the deal when Tesla was a smaller company and the SEC action could have jeopardized its financing.

“The SEC has maintained constant investigations into Mr. Musk’s speech, employing nebulous interpretations of the consent decree seemingly designed to curb and chill his future speech, all regarding speech entirely unrelated to the 2018 tweet for which the SEC initiated this action,” Spiro wrote.

Tesla is now the most valuable automaker in the world, and Musk is the world’s wealthiest person.

Liman ruled that Musk’s claim that economic duress caused him to sign the settlement is “wholly unpersuasive.”

Even if Musk was worried that litigation with the SEC would ruin Tesla financially, “that does not establish a basis for him to get out of the judgment he voluntarily signed,” Liman wrote.

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

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - Chinese President Xi Jinping waves at an event to introduce new members of the Politburo Sta...
Associated Press

China’s Xi faces public anger over draconian ‘zero COVID’

SHANGHAI (AP) — Barely a month after granting himself new powers as China’s potential leader for life, Xi Jinping is facing a wave of public anger of the kind not seen for decades, sparked by his draconian “zero COVID” program that will soon enter its fourth year. Demonstrators poured into the streets over the weekend […]
2 hours ago
In this photo released by Xinhua News Agency, from left, Chinese astronauts for the upcoming Shenzh...
Associated Press

China rocket taking 3 to space station to blast off Tuesday

BEIJING (AP) — A rocket carrying three astronauts to finish building China’s space station will blast off Tuesday amid intensifying competition with the U.S., the government said Monday, The crew includes a veteran of a 2005 space mission and two first-time astronauts, according to the China Manned Space Agency. The Shenzhou-15 mission will take off […]
2 hours ago
A passerby tries to pass through a protest in Beijing, Sunday, Nov. 27, 2022. Protesters angered by...
Associated Press

China affirms zero-COVID stance, eases rules after protests

BEIJING (AP) — Authorities eased anti-virus rules in scattered areas but affirmed China’s severe “zero- COVID” strategy Monday after crowds demanded President Xi Jinping resign during protests against controls that confine millions of people to their homes. The government made no comment on the protests or criticism of Xi, the most widespread display of opposition […]
2 hours ago
FILE - Ukraine's President Viktor Yushchenko talks with US President George W.Bush, at the NATO Sum...
Associated Press

14 years on, NATO to renew a vow to Ukraine

BUCHAREST (AP) — NATO returns on Tuesday to the scene of one of its most controversial decisions, intent on repeating its vow that Ukraine — now suffering through the 10th month of a war against Russia — will join the world’s biggest military alliance one day. NATO foreign ministers will gather for two days at […]
2 hours ago
This photo mad available by Ukrainian doctor Oleh Duda shows the moment when lights at a hospital w...
Associated Press

Surgeons work by flashlight as Ukraine power grid battered

KHERSON, Ukraine (AP) — Dr. Oleh Duda, a cancer surgeon at a hospital in Lviv, Ukraine, was in the middle of a complicated, dangerous surgery when he heard explosions nearby. Moments later, the lights went out. Duda had no choice but to keep working with only a headlamp for light. The lights came back when […]
2 hours ago
Sheree Perry of Virginia Beach, center, prays with chaplains at a memorial on Friday, Nov. 25, 2022...
Associated Press

City to hold vigil honoring those killed in Walmart shooting

CHESAPEAKE, Va. (AP) — The city of Chesapeake, Virginia, has scheduled a candlelight vigil for Monday evening that will honor and remember the victims of last week’s mass shooting at a Walmart store. Six employees were killed and six people were wounded by a store supervisor late Tuesday night in the city of about 250,000 […]
1 day ago

Sponsored Articles

...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
SCHWARTZ LASER EYE CENTER

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
...
Day & Night Air Conditioning, Heating and Plumbing

Here are 4 signs the HVAC unit needs to be replaced

Pool renovations and kitchen upgrades may seem enticing, but at the forefront of these investments arguably should be what residents use the most. In a state where summertime is sweltering, access to a functioning HVAC unit can be critical.
In court brief, Musk says the SEC is unlawfully muzzling him