Elon Musk Claims the SEC is Muzzling his Tweets

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Facts

  • In a court brief on Tuesday, Elon Musk's lawyer alleged that the US Securities and Exchange Commission (SEC) has been violating the Tesla CEO's freedom of speech by continuing to enforce a 2018 securities fraud settlement against him.
  • The dispute stems from a 2018 tweet in which Musk said he had the “funding secured” to take Tesla private, resulting in the company's stock soaring. But the funding was reportedly not secured and the company remained public; Musk signed an agreement with the SEC in which he and Tesla agreed to pay $20M for the misleading tweet.
  • A provision of the settlement requires Musk to get approval from a Tesla attorney before tweeting about the company. The SEC is currently investigating whether a tweet from last November, where he asked his followers whether he should sell 10% of his stake in Tesla, violated the settlement.
  • Musk’s filing in the federal appeals court in Manhattan, NY, seeks to overturn a lower court's decision in April to uphold the settlement. In that filing, Musk’s attorney Alex Spiro argued that the SEC has been investigating Musk for issues not covered by the settlement.
  • Spiro also argues that Musk is under constant fear that the SEC will disagree with what he posts on Twitter, arguing the agency's interpretations of the settlement are “seemingly designed to curb and chill his future speech.”
  • In April, US District Judge Lewis Liman said Musk's claim that the SEC used the settlement to harass him and launch investigations was “meritless.” Musk is hoping the Second Circuit of Appeals will be more amenable to his perspective.

Sources: Finance, Associated Press, and Reuters.

Narratives

  • Narrative A, as provided by Knowledge. More oversight of Musk is good for Tesla and protects shareholders, potential investors, and the public from being misled and defrauded by his careless tweets. Musk’s settlement with the SEC was the best option for him - otherwise, he could have been stripped of his role as Tesla's CEO.
  • Narrative B, as provided by Reuters. With the SEC paying such close attention to Musk, one can't help but wonder why the Commission doesn't handle more pressing issues, like the increasing number of publicly traded "blank-check" companies. The SEC is hypocritically targeting a high-profile and influential figure and assaulting freedom of speech.

Predictions