Elon Musk Loses Appeal to Tweet about Tesla without Supervision

Elon Musk is the owner and boss of Twitter and Tesla. However, he cannot use the social network to tweet about the electric car maker without first being supervised by a company lawyer. Elon Musk committed to it to close an investigation into breach of stock market legislation. Later, however, he claimed that this violated his freedom of expression. He contested it and lost before the district judge. He then appealed and lost again resoundingly this Monday.

The appeals court ruling is harsh on the tycoon, whom he portrays as a fickle character: “If Musk wanted to preserve his right to tweet without even limited internal oversight on certain Tesla-related issues, he had ‘the right to litigate and defend himself against the allegations’. [de la La Comisión de Valores y Bolsa, SEC]’ or to negotiate a different agreement, but decided not to do it”, point out the three judges who sign the sentence. “Having made that choice, you cannot (…) collaterally reopen a final judgment simply because you have now changed your mind,” they add.

The case stems from the famous August 2018 tweet in which he lied when he said he had “secured financing” to delist Tesla and even published the price of the offer he planned, $420 (the number to refer to Tesla). marijuana). Tesla shares soared, but there was no financing or offer.

The SEC has opened an investigation into the apparent price manipulation. Musk reached an agreement to leave the presidency of Tesla (although he remains the CEO), accept a fine of 40 million dollars (to be paid in half between himself and the company) and subject future tweets about the manufacturer to supervision. electric cars.

In his appeal, Musk argued that the agreement should be modified both because of an alleged change in circumstances and because the decree contains a “prior restriction” that violates the First Amendment, which enshrines the right to freedom of expression.

As for the first ground, Musk argued that the SEC’s methods of enforcing the agreement constitute changed circumstances that have made compliance substantially more onerous. “We disagre”, say the judges.

“We see no evidence to support Musk’s claim that the SEC has used the consent decree [nombre del acuerdo] to conduct bad faith and harassment investigations of your protected speech. To the contrary, the record indicates that the SEC has opened only three investigations into Musk’s tweets since 2018. The first led to the consent decree that is the subject of this appeal.” indicates the resolution. Furthermore, each challenged tweet “plausibly violated the terms of the consent decree.”

The SEC has investigated whether Musk’s November 2021 tweets asking his Twitter followers if he should sell 10% of his Tesla shares violated the October 2018 agreement.

The judges also reject Musk’s arguments that the settlement is a “prior restriction” on his free speech, that he did not validly waive his First Amendment rights, and that even if he did, the waiver is unenforceable. “Parties who sign consent decrees may voluntarily waive First Amendment and other rights,” they state.

The ruling indicates that the fact that the agreement between Musk and the supervisor may or may not have provided broader relief than a court could have granted after trial does not detract from the SEC’s ability to enforce the agreement Musk signed. voluntarily.

“The public interest also does not require modification of the consent decree. In any case, it goes in the opposite direction, given the importance of the public interest in the application of federal securities laws”, add the judges.

Last year, U.S. District Judge Lewis Liman refused to release Musk from the settlement, saying the Tesla boss was “just sorry that he felt he had to go along with it at the time” while now he “wishes he hadn’t.” Liman also denied Musk’s request to block an SEC request seeking information about his tweets.

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