A federal judge rejected Elon Musk’s bid to end a 2018 consent decree limiting his ability to freely tweet about Tesla’s business, dealing a blow to the billionaire in his ongoing feud with the SEC, a court ruling revealed on Wednesday.
Musk’s attorneys were attempting to repeal a provision requiring Tesla attorneys to read and approve all of his tweets before they can be posted – arguing the terms infringed on his First Amendment rights and was tantamount to “harassment.’
US District Court Judge Lewis Liman slammed Musk’s argument in a scathing ruling that dismissed his legal team’s motion, noting that the billionaire’s decision to enter into the agreement in 2018 undercut his argument that his rights were being violated.
“[Musk] cannot now complain that this provision violates his First Amendment rights,” the ruling said. “Musk’s argument that the SEC has used the consent decree to harass him and to launch investigations of his speech is likewise meritless and, in this case, particularly ironic.”
The judge’s ruling means Musk is still unable to freely tweet about Tesla’s operations – despite his successful bid this week to buy the social media platform for $44 billion.
“Musk cannot now seek to retract the agreement he knowingly and willingly entered by simply bemoaning that he felt like he had to agree to it at the time but now — once the specter of the litigation is a distant memory and his company has become, in his estimation, all but invincible — wishes that he had not,” the judge’s ruling added.
The consent decree was first imposed as part of a deal Musk cut with the SEC to settle federal claims that he fraudulently claimed in an Aug. 7, 2018 tweet to have “funding secured’ to take Tesla private at $420 per share. Despite entering the settlement, Musk has maintained that he was being truthful.
Musk’s attorney, Alex Spiro, did not immediately return a request for comment.
Musk has been openly disdainful of the SEC in recent days – referring to agency officials as “bastards” and saying he was “forced to concede to the SEC unlawfully” during his appearance at a TED conference in Vancouver earlier this month.
The Tesla CEO said he had little choice but to accept the settlement’s terms because banks would have cut off the electric car maker’s funding if he hadn’t.
“So that’s like having a gun to your child’s head,” Musk said at the conference.
In March, Musk compared himself to the rapper Eminem in a filing asking a judge to dismiss an SEC request for a subpoena seeking information on whether the tech entrepreneur has complied with the decree’s terms – and to quash the consent decree entirely.
The SEC renewed its scrutiny of Musk’s tweets after he posted last November asking followers if he should sell 10% of his Tesla stock.
Musk’s original settlement with the SEC required him to pay a civil penalty of $20 million and to give up his positive as chairman of Tesla’s board. Any tweets or written communication from Musk regarding Tesla’s business has to be pre-approved by company attorneys.
Aside from his lengthy legal battle with the SEC, Musk is locked in litigation with Tesla shareholders who allege his “funding secured” tweet caused them to lose money. Last week, a judge in that case rejected a bid to impose a gag order on Musk.
Josh Kosman contributed reporting.
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