A judge’s refusal to let Elon Musk out of his Securities and Exchange Commission settlement indicates the limits of his right to free speech 2022-04-27 13:28:38


New Twitter owner Elon Musk still has some limitations to his tweets that most of us don’t. It’s the result of his 2018 settlement with the Securities and Exchange Commission (SEC) over his infamous “secured funding” tweet about making Tesla private. Even considering Musk’s complaints that he was They were forced to take the bargain And Contempt for “bastards” at the Securities and Exchange Commissionearlier today, U.S. District Court Judge Lewis Lehman ruled v. Musk, leaving the agreement as it was originally written (via Reuters).

One of the things Musk wanted — but didn’t get — was for the court to block a Securities and Exchange Commission subpoena for information to determine whether a tweet last fall with a poll about selling 10 percent of his stock was examined first, according to the agreement. approval is under. Musk complained of an “endless investigation” that was an attempt to “calm his exercise of First Amendment rights.”

Judge Lehman decided that the court was prevented from reviewing whether the subpoena was validly issued, but also wrote that if the court had ruled it, the evidence presented showed that “the Securities and Exchange Commission is clearly qualified to investigate the case.”

As for Musk’s request to end the consent decree, claiming that it intrudes on “the First Amendment’s right to be free from prior restraints,” the judge disagreed with his arguments, By the words of Eminem or otherwise. In addition to noting that “even Musk acknowledges that his free speech rights do not allow him to engage in speech that is or could be considered “fraudulent or in violation of securities laws,” the judge wrote:

Musk, by entering into a consent decree in 2018, agreed to a provision requiring prior consent to any written communications that contain, or could reasonably contain, informational material to Tesla or its shareholders. He cannot now complain that this provision infringes his First Amendment rights.

Musk’s other arguments have similarly failed. As for his claim about the “huge number of orders” placed on him and his company as a result of the agreement, the judge determined that the SEC’s three sets of inquiries were “not surprising.” The same applies to his argument that he concluded the deal under “economic coercion”. Judge Lehman writes that seeing it through the lens provided by Musk’s lawyers will make it impossible to reach settlements because executives can simply claim that they felt “coerced,” forcing the government to conduct expensive trials and remove an option for defendants.

Musk was not forced to enter into a decree of consent; Instead, “For [his] special strategic purposes, [Musk]with the advice and assistance of counsel, entered into these agreements voluntarily, in order to secure the benefits from them, including their termination.” Securities and Exchange Commission v. Conradt, 309 FRD 186, 187-88 (SDNY 2015). Musk cannot now retract the agreement that He entered it on purpose and willingly by sighing simply because he felt he had to agree to it at the time but now—once the specter of litigation became a distant memory and his company, appreciation, all indomitable—wishes that he did not.