Elon Musk Loses Bid to End SEC ‘Muzzle’ Over Tweets

Elon Musk Loses Bid to End SEC ‘Muzzle’ Over Tweets – On Monday, the 2nd U.S. Circuit Court of Appeals in Manhattan dismissed Elon Musk’s appeal to modify or terminate his 2018 securities fraud settlement with the U.S. Securities and Exchange Commission (SEC). The settlement required a Tesla lawyer to pre-approve some of Musk’s tweets that may contain material information about Tesla. 

Musk had claimed that the SEC had violated his First Amendment free speech rights by conducting bad-faith and harassing investigations under the guise of the consent decree. The settlement was reached after the SEC filed a lawsuit against Musk for defrauding investors with a tweet on August 7, 2018, where he claimed to have secured funding to take Tesla private. 

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As part of the settlement, Musk and Tesla each paid $20 million in civil fines, and Musk relinquished his position as chairman. Musk’s legal team argued that the pre-approval mandate was an unlawful prior restraint on his speech and likened it to a “government-imposed muzzle.” However, the appeals court disagreed with Musk’s argument and upheld the original settlement.

The court’s decision reaffirms the SEC’s authority to regulate Musk’s communications with the public regarding Tesla, particularly when it comes to material information that may impact investors. While Musk has a reputation for his bold and often controversial tweets, the court’s ruling underscores the importance of transparency and accountability in corporate communications.

Elon Musk has been in the spotlight for his Twitter activity, which often includes updates on Tesla’s products, production numbers, and plans for the future. However, his tweets have also led to legal trouble, with the SEC accusing him of misleading investors with his tweet about taking Tesla private.

As part of the settlement, Musk agreed to have a Tesla lawyer review his tweets that could potentially contain material information about the company. This requirement was put in place to ensure that Musk did not mislead investors with his social media posts, which have often caused confusion and market volatility.


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