SEC says it’s not violating Elon Musk’s right to free speech

Dec 22, 2022, 6:08 PM | Updated: Dec 23, 2022, 8:13 am
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. The U.S. Securities and Exchange Commission is denying allegations that it is violating Musk’s free speech rights by trying to enforce a 2018 securities fraud settlement. The commission says in an appeals brief filed Thursday, Dec. 22, 2022, that Musk waived his First Amendment rights by agreeing to the settlement. (AP Photo/Susan Walsh, File)

(AP Photo/Susan Walsh, File)

DETROIT (AP) — The U.S. Securities and Exchange Commission is denying allegations that it is violating Elon Musk’s free speech rights by trying to enforce a 2018 securities fraud settlement.

The commission, in an appeals brief filed late Thursday, said Musk, the chief executive of Tesla, waived his First Amendment rights by agreeing to the settlement and amendments. It also rejected Musk’s argument to scrap the agreement because he signed it under financial duress and didn’t understand it.

And the SEC argued that doing its job in the interest of shareholders and markets outweigh Musk’s interest in being able to tweet about Tesla without Tesla’s approval.

“Musk’s agreement protects investors by ensuring that the information the public uses to make decisions about Tesla securities is accurate and consistent with what Tesla reports,” the agency’s brief said.

The dispute stems from an October 2018 agreement with the SEC that Musk signed involving his statements on Twitter, which Musk this year purchased for $44 billion.

Musk 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 then jumped. The stock now trades around $122. The settlement specified governance changes, including Musk’s ouster as board chairman, as well as pre-approval of his tweets by a Tesla lawyer.

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

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.

In his filing with the Second Circuit Court of Appeals, Musk lawyer Alex Spiro contended that the SEC is unlawfully muzzling the Tesla CEO, violating his free speech rights by continually trying to enforce the settlement.

Musk’s appeal brief filed in September says the provision requiring prior approval before tweeting about the electric car company is an illegal “government-imposed muzzle on Mr. Musk’s speech before it is made.”

But the SEC said in its response that Musk “knowingly and voluntarily waived any First Amendment rights” by signing the settlement.

“Musk suggests that his waiver was somehow invalid, but it strains credulity to believe that the CEO of Tesla did not understand the agreements he negotiated and signed,” the SEC wrote.

The settlement, the SEC wrote, doesn’t stop Musk from tweeting about Tesla or other matters, and it doesn’t place the court or the SEC in a position to review his tweets before publication. “Rather, it required him to adhere to Tesla’s policies regarding oversight of material Tesla-related communications. It had no bearing on tweets or other communications unrelated to Tesla,” the SEC wrote.

The SEC is investigating whether Musk violated the settlement with tweets in November of 2021 asking Twitter followers if he should sell 10% of his Tesla stock.

“The possibility that the Commission would continue to evaluate Musk’s disclosures — and his compliance with Tesla’s controls — was hardly unanticipated,” the SEC wrote.

In his appeal brief, Musk attorney Alex Spiro contends that the SEC is continually investigating Musk for topics not covered by the settlement. It asks the court to strike or modify the prior approval provision.

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

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

AP

FILE - Zoubin Ghahramani, vice president of research at Google, speaks at the Google AI@ event on W...
Associated Press

Google has the next move as Microsoft embraces OpenAI buzz

Before the artificial intelligence tool ChatGPT was unleashed into the world, the novelist Robin Sloan was testing a similar AI writing assistant built by researchers at Google.
19 hours ago
budgets...
Associated Press

Group’s lawsuit seeks to void Washington transportation law

A conservative legal advocacy organization is suing to halt the nearly $17 billion transportation funding bill passed by the Washington Legislature and signed by Gov. Jay Inslee last year.
19 hours ago
This photo provided by Adriana Medina shows Guillermo Medina and his wife, Adriana, with their chil...
Associated Press

Recording: Wife told police mentally ill husband had gun

LOS ANGELES (AP) — Police in Culver City, California, released body camera footage Thursday showing events before officers shot an unarmed man diagnosed with paranoid schizophrenia in the back last year, including audio recordings of his estranged wife telling police he was armed and dangerous. In the footage, officers are seen chasing after Guillermo Medina […]
19 hours ago
Associated Press

UN envoy: Iraq’s new leaders must keep fighting corruption

UNITED NATIONS (AP) — The U.N. special envoy for Iraq urged the country’s new government Thursday to keep fighting corruption and move quickly on much-needed economic, fiscal and financial reforms. Jeanine Hennis-Plasschaert told the U.N. Security Council many other areas also need immediate government attention, among them ensuring human rights, resolving issues with the Kurdistan […]
19 hours ago
FILE - Voters wait in line outside a pavilion at Center Street Park shortly before the polling site...
Associated Press

Trump campaign staff on 2020 election lies: ‘fan the flame’

MADISON, Wis. (AP) — A newly released audio recording offers a behind-the-scenes look at how former President Donald Trump’s campaign team in a pivotal battleground state knew they had been outflanked by Democrats in the 2020 presidential election. But even as they acknowledged defeat, they pivoted to allegations of widespread fraud that were ultimately debunked […]
19 hours ago
Associated Press

ASEAN foreign ministers meet under shadow of Myanmar crisis

JAKARTA, Indonesia (AP) — Southeast Asian foreign ministers are meeting in Indonesia’s capital Friday for talks bound to be dominated by the deteriorating situation in Myanmar despite an agenda focused on food and energy security and cooperation in finance and health. Myanmar belongs to the 10-member Association of Southeast Asian Nations, but the annual ministers’ […]
19 hours ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
SEC says it’s not violating Elon Musk’s right to free speech