Judge rejects Elon Musk’s bid to end SEC approval decree 2022-04-27 14:35:09

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Tesla Inc CEO Elon Musk attends the World Artificial Intelligence Conference (WAIC) in Shanghai, China on August 29, 2019.

on the song | Reuters

A federal judge has fallen Tesla CEO Elon Musk’s attempt to terminate his settlement agreement with the Securities and Exchange Commission after the agency charged him with securities fraud in 2018. The judge also denied Musk’s request to overturn a new SEC subpoena.

In 2018, financial regulators made accusations Tesla and Musk By making “false and misleading” statements to investors when the CEO announced on Twitter that he was considering making the automaker private at $420 a share, and that funding had been “secured.”

Tesla’s stock price jumped more than 6% on August 7, 2018, and Tesla’s trading halted following Musk’s tweets that day. Shares in the electric car maker were volatile for weeks after that.

As part of a settlement agreement, Tesla and Musk each agreed to pay a fine of $20 million. Musk also had to step down from his role as Tesla’s president for 3 years, agreeing not to claim innocence or deny the allegations of the SEC complaint.

Finally, Tesla and Musk agreed to have the CEO’s tweets vetted by a qualified securities attorney before they are published if they contain material business information likely to affect Tesla’s stock price.

The argument for freedom of expression

Musk has continued to use Twitter shamelessly.

For example, on November 6, 2021, he said Tweet Poll He wrote to his tens of millions of followers on the social network: “A lot of unrealized gains have been made lately as a measure of tax evasion, so I suggest selling 10% of my Tesla stock. Do you support that?” He added: “I will stick to the results of this survey in any way.”

After that, the Securities and Exchange Commission summoned Elon Musk and his comrades Brother Kimbal Musk Who is a Tesla board member, and is trying to determine whether the CEO is in compliance with a settlement agreement, and whether they both follow other securities regulations.

Through his attorney Alex Spiro, earlier this year Musk complained to the court that the Securities and Exchange Commission was trying to “gag and harass” him through ongoing subpoenas, and trying to “chill” his First Amendment rights by supervising his use of Twitter.

The Tesla and SpaceX chief sought to terminate the “Twitter sitter” agreement, the colloquial name for the consent decree, and asked the court to overturn parts of the SEC’s subpoena.

Refusal

The judge presiding over the case, Judge Louis C. Lyman, held in both orders in a strongly worded opinion and ordered on Wednesday, April 27.

He dropped Musk’s arguments in the First Amendment, writing, “Even Musk acknowledges that his rights to free speech do not allow him to engage in speech that could or could be considered ‘fraudulent or contrary to securities laws.’ Thus, the consent decree does not impose obligations” became disallowed. them under federal law.”

He also noted that Musk did not file some of the onerous subpoenas, and that the Securities and Exchange Commission (SEC) was within its rights to seek information from him.

The judge revealed that he owned Tesla stock in 2020, however, CNBC confirmed that he did not own Tesla stock at the time two Musk and Tesla-related cases were set up in April of this year.

Spiro, Musk’s attorney, told CNBC on Wednesday:

“Nothing will ever change the fact that Elon Musk was considering taking Tesla private and it could be – all that remains after half a decade is the remaining litigation that will continue to make that fact clearer and clearer.”

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