Tesla CEO Elon Musk has asked a federal judge to overturn a consent order with the Securities and Exchange Commission that compels him to have his tweets approved by a lawyer before posting them.
The decree, signed in 2018 in response to Musk’s iconic « funding secured » tweet, is being used to « trample on Mr. Musk’s First Amendment rights and impose prior limits on his speech, » his lawyers argued in a court filing Tuesday. Musk is also attempting to prevent the SEC from subpoenaing him in connection with his tweets regarding selling 10% of his share in Tesla.
Musk famously tweeted on August 7th, 2018, that he has the cash to take Tesla private at $420 per share. (Tesla is a publicly traded corporation that was founded in 2010.)
The SEC launched an investigation immediately, eventually concluding that, while Musk had met with Saudi Arabia’s sovereign wealth fund, he « had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a’special purpose fund,’ and had not confirmed support of Tesla’s investors for a p
Musk, on the other hand, asserts in a new court filing on Tuesday that « financing was secured, and there was investor support. » He stated that he felt pressed to resolve the problem with the SEC or risk jeopardizing Tesla’s financial security.
« Despite this, the SEC’s unrelenting regulatory pressure, combined with the collateral consequence of the SEC’s lawsuit against me, resulted in a circumstance in which I was obliged to sign the consent decree in 2018, » Musk explained. « Tesla was a less mature firm, and the SEC’s action put the company’s financing at risk. »
Musk said he was about to sign the ruling until he realized it would have ramifications for his other companies, Space X, Neuralink, and The Boring Company. He claimed he tried to get out of it, but caved after the SEC sued him for securities fraud and other large Tesla stockholders threatened to sell their shares.
« I simply wanted to settle to benefit Tesla, but I didn’t want to hurt the other firms, » Musk explained. « Doing so felt improper. »
The SEC is looking into whether Musk and his brother Kimbal Musk’s recent stock sales violated insider trading rules. According to The Wall Street Journal, the probe began late last year when Musk and his brother sold $108 million in Tesla stock. That transaction occurred the day before Elon Musk surveyed his Twitter followers on whether he should sell 10% of his stock in the firm — and vowed to abide by the findings of the vote.
Musk defended his actions in this week’s filing, as his lawyers sought to overturn the agency’s demand. Musk writes, « I never deceived to shareholders. » « I would never tell a falsehood to my shareholders. » I entered into the consent decree to ensure Tesla’s existence and that of its stockholders. »
Musk’s feud with the SEC has erupted in recent weeks. The billionaire CEO accused the agency of conducting « endless, unjustified inquiries » into him and his company. He also claimed that the government was not following through on its promise to send $40 million in penalties money to Tesla stockholders as part of the 2018 settlement. In addition, he alleged that the SEC was leaking information on federal investigations without offering any specific proof to support his claim.