Elon Musk Rejected: Appeals Court Upholds SEC Settlement, Continues Oversight Of His Tweets

On Monday, a federal appeals court dismissed Elon Musk's attempt to modify or terminate his 2018 securities fraud settlement with the U.S. Securities and Exchange Commission (SEC). The settlement required a Tesla Inc TSLA lawyer to pre-approve some of Musk's tweets.

According to Reuters, the 2nd U.S. Circuit Court of Appeals in Manhattan rejected Musk's allegation that the SEC used his consent decree for bad-faith, harassing investigations that violated his First Amendment right to free speech under the U.S. Constitution. The decree was a resolution to an SEC lawsuit accusing Musk of defrauding investors with an August 7, 2018, tweet, in which he claimed to have "funding secured" to take Tesla private.

As part of the settlement, Musk's tweets containing material information about Tesla required advance review. Musk and Tesla each paid $20 million in civil fines, and Musk relinquished his position as chairman. During the appeal, Musk's lawyers described the pre-approval requirement as a "government-imposed muzzle" and an unlawful prior restraint on his speech.

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However, the three-judge appeals court panel ruled that the SEC had only initiated two subsequent inquiries into Musk's tweets, which "plausibly violated" the terms of the decree, Reuters reported. The panel stated that the SEC's "limited, appropriate inquiries in this case have not made compliance with the consent decree 'substantially more onerous'" for Musk, contrary to his claim.

The court also noted that Musk had chosen to allow his tweets to be screened and was not entitled to revisit the issue "because he has now changed his mind." Alex Spiro, Musk's attorney, said in an email, "We will seek further review and continue to bring attention to the important issue of the government constraint on speech." The SEC declined to comment on the matter.

The recent decision supports an April 2022 ruling by U.S. District Judge Lewis Liman in Manhattan. Liman described Musk's arguments as a "bemoaning" of requirements he no longer wanted to adhere to, now that Tesla had "become, in his estimation, all but invincible."

In October, Musk purchased Twitter for $44 billion and currently oversees rocket and spacecraft manufacturer SpaceX. According to Forbes magazine, he is the world's second-richest person. In February, a San Francisco jury found Musk not liable for investor losses stemming from his "funding secured" tweet. 

Now Read: Working For Elon Musk 'Like Working With Two Different People': Salaries Of Employees At Tesla, SpaceX And Twitter

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Courtesy of Dunk on Flickr.