Elon Musk likens himself to Eminem in legal battle with SEC

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Elon Musk compared himself to the foul-mouthed rapper Eminem in a court filing, alleging that the Securities and Exchange Commission is running roughshod over his First Amendment rights as it clamps down on his Twitter habit.

The billionaire Tesla CEO’s Tuesday legal salvo cites Eminem and his song “Without Me,” whose lyrics include “The FCC won’t let me be or let me be me” — a lament over a $7,000 penalty that the Federal Communications Commission imposed in 2002 on a Colorado radio station, Citadel Broadcasting, for playing Eminem’s profanity-laden ditty “The Real Slim Shady”.

In Musk’s Tuesday filing in the US Southern District of New York, his lawyers quote Eminem’s lyrics — inserting “SEC” in brackets in place of FCC — and note that the FCC ultimately rescinded its penalty, ruling that “the First Amendment is a critical Constitutional limitation that demands we proceed cautiously and with appropriate restraint.”

At issue is a request by the SEC — headed by hard-charging Chair Gary Gensler — for a wide-ranging subpoena covering his tweets from April 30, 2019 to the present to determine whether Musk received pre-approval for each of them by a Tesla lawyer before publication.

SEC Chair Gary Gensler
REUTERS

The Twitter regulations were imposed as part of a 2018 consent decree to settle a flap over Musk’s now-infamous Aug. 7, 2018 tweet, in which he claimed he had “funding secured” to take Tesla private at $420 a share. Musk — who said at the time that the $420 price was a pot joke to impress his then-girlfriend Grimes — has recently claimed that he did indeed have backing from Saudi investors to fund a buyout of Tesla.

Musk is asking US Judge Alison Nathan to quash the subpoena and terminate the first-of-its kind consent decree. In a court filing last week, the SEC claimed that Musk’s lawyer, Alex Spiro of Quinn Emanuel, told the agency on Feb. 25 that Musk would not produce any documents regarding pre-approval or review of his tweets.

“The intermittent nature of the SEC’s harassment underscores the [consent decree’s] chilling effect because it is impossible to know ex ante what tweets will raise the Commission’s ire,” Musk’s lawyer wrote in the Tuesday filing. “Even the SEC seems unsure of what tweets require preclearance, leaving only two conclusions: the consent decree is unduly vague or the agency is pursuing its investigation in bad faith.”

Eminem
Eminem performs at the halftime show of Super Bowl LVI at SoFi Stadium on Feb. 13.
EPA

The SEC is reportedly investigating whether November stock sales by Musk or his brother, Kimbal, a day before he polled Twitter users about whether he should offload 10 percent of his Tesla stake violated insider-trading rules.

Last week, the SEC in asking the New York Federal Court to enforce the subpoena said it disagreed with Musk’s First Amendment arguments.

“This argument ignores the critical fact that Musk — represented by experienced, capable counsel — voluntarily consented to the entry of the court orders that established the preapproval requirement.”

“Musk cannot now cast [this] off simply because he has found complying with Tesla’s procedures to be less convenient than he had hoped, or because he wishes the SEC would not investigate whether Tesla’s disclosure controls and procedures are actually being maintained and followed,” the SEC added.

Judge Nathan is expected to hold a hearing on the matter in the next few weeks, sources said.

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