Musk Says He Will Continue to Fight SEC Over Settlement
In a major setback for Elon Musk, a federal appeals court has rejected his bid to overturn a settlement with the Securities and Exchange Commission (SEC) that requires him to have a lawyer approve some of his tweets about Tesla.
The 2nd U.S. Circuit Court of Appeals in Manhattan ruled on Monday that the settlement is valid and does not violate Musk’s First Amendment rights. The court said that Musk was free to challenge the settlement in court when he signed it in 2018, but he chose not to do so.
The settlement was reached after Musk tweeted that he had “funding secured” to take Tesla private at $420 per share. The tweet caused Tesla’s stock price to jump, but it later turned out that Musk did not have the funding secured. The SEC accused Musk of making false and misleading statements, and he agreed to step down as Tesla chairman, pay a $20 million fine, and have his tweets about Tesla pre-approved by a lawyer.
Musk has repeatedly tried to get out of the settlement. In 2019, he asked a judge to modify the settlement so that he would not have to have his tweets pre-approved. The judge denied the request. In 2020, Musk asked the appeals court to overturn the settlement. The court also denied that request.
Musk has said that the settlement is a violation of his First Amendment rights. He has also said that the settlement is unnecessary because Tesla is now a much more mature company. However, the appeals court said that the settlement is valid because it is designed to protect investors from Musk’s tweets.
The appeals court’s ruling is a major victory for the SEC. It sends a message to other CEOs that they cannot use social media to make false or misleading statements about their companies. It also shows that the SEC is willing to take action against CEOs who violate securities laws.
It is unclear what Musk will do next. He could appeal the ruling to the Supreme Court. He could also try to negotiate a new settlement with the SEC. However, it is unlikely that the SEC will agree to a settlement that does not require Musk to have his tweets pre-approved.
The appeals court’s ruling is a setback for Musk, but it is also a victory for investors. The settlement will help to ensure that Musk’s tweets about Tesla are accurate and truthful. This will help to protect investors from making bad decisions about Tesla stock.