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Topline
A federal judge on Wednesday denied Elon Musk’s request to terminate a deal with the Securities and Exchange Commission requiring his tweets about Tesla to undergo a pre-approval process, saying none of Musk’s arguments claiming violations of free speech “hold water.”
“None of the arguments hold water,” a federal judge said Wednesday in the latest ruling stemming … [+] from Musk’s “funding secured” tweet in 2018. AFP via Getty Images
Key Facts
In a 22-page court filing released Wednesday, U.S. District Judge Lewis Liman denied a motion Musk filed on March 8 to end a consent decree and kill parts of a subpoena stemming from an SEC settlement in 2018 over Musk’s tweet claiming that he had “secured” funding for a deal to take Tesla private at $420 per share when no agreement had been penned.
In his February motion, Musk claimed the settlement provision requiring a Tesla lawyer pre-approve his tweets and other written communications about the stock intrudes on his First Amendment rights, but on Wednesday, Liman said Musk’s free speech rights do not permit any speech that could “be considered fraudulent or otherwise violative of the securities laws.”
The judge further alleges Musk tweeted several times about his large sales of Tesla shares late last year without obtaining pre-approval for the tweets—prompting a subpoena that Musk in February claimed was brought forth only because he is an “outspoken critic” of the government.
“None of the arguments hold water,” Liman said Wednesday, calling Musk’s argument that the SEC has used the settlement to harass him and launch investigations of his speech “meritless” and “particularly ironic.”
On Monday, Musk blasted the SEC as “shameless puppets of Wall Street short-sellers” and claimed he only tweeted in August that funding for a deal to take Tesla private was secured because the head of Saudi Arabia’s sovereign wealth fund had “committed unequivocally” to join him in the venture.
Key Background
Musk’s complicated history with the SEC has reared its way into his latest business foray—a $43 billion takeover of Twitter that the company’s board agreed to Monday. In a filing on April 14, Musk unveiled an offer to buy 100% of Twitter at $54.20 per share in cash and then take it private. Spectators quickly took note of the peculiar share price and its resemblance to the $420 per share offer for Tesla. In their September 2018 settlement, Musk and the SEC agreed the billionaire would step down as Tesla chair and pay a $20 million penalty to harmed investors. Tesla was also required to pay a $20 million fine.
Tangent
In its 2018 complaint, the SEC noted Musk calculated a $419 price per share for Tesla based on a 20% premium at the time (because he thought 20% was a “standard premium”) and that he rounded it up to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend “would find it funny, which admittedly is not a great reason to pick a price.”
Chief Critic
“The SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government,” Musk’s lawyer wrote in a February court filing. “The SEC’s outsized efforts seem calculated to chill his exercise of First Amendment rights rather than to enforce generally applicable laws in evenhanded fashion.”
Big Number
$245.7 billion. That’s how much Musk is worth on Wednesday, according to Forbes.
Further Reading
Elon Musk, Tesla Accuse SEC Of ‘Calculated Effort’ To Chill His Right To Free Speech (Forbes)
Financial Services
