Elon Musk’s bid to alter or terminate his 2018 securities fraud settlement with the U.S. Securities and Exchange Commission (SEC) has been rejected by a federal appeals court. The court ruled that the SEC did not violate Musk’s First Amendment rights by requiring a lawyer from Tesla to review and approve his tweets in advance.
The settlement stemmed from a lawsuit filed by the SEC, alleging that Musk defrauded investors through a tweet claiming to have secured funding to privatize Tesla. As part of the agreement, Musk agreed to have his tweets reviewed if they contained material information about the company. In addition to a $20 million fine for both Musk and Tesla, Musk stepped down as chairman.
Musk’s legal team argued that the pre-approval requirement was an unlawful restriction on his freedom of speech, referring to it as a “government-imposed muzzle.” However, the appeals court panel determined that the SEC’s subsequent inquiries into Musk’s tweets were within the bounds of the consent decree.
The court highlighted that Musk had voluntarily agreed to the tweet review process and that changing his stance did not provide grounds for revisiting the settlement. In response to the ruling, Musk’s lawyers expressed their intent to seek further review, aiming to shed light on what they perceive as government encroachments on freedom of speech.
The sources for this piece include an article in Reuters.