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Musk's Tweets Still Need to be Approved by a Lawyer, the SEC says

Musk still needs lawyer approval for tweets, SEC says

By Shahid AnwarPublished about a year ago 4 min read

Musk's Tweets Still Need to be Approved by a Lawyer, the SEC says

There has been a claim that Tesla CEO Elon Musk needs to be pre-approved by lawyers before tweeting information related to Tesla in the U.S. Securities and Exchange Commission (SEC).

In a letter sent this week to the U.S. Court of Appeals for the Second Circuit in New York, the Securities and Exchange Commission further argued that the earlier settlement agreement between the agency and Musk is completely legal and constitutional.

Earlier this year, Tesla's CEO tweeted that he had secured funding for the company's acquisition of the company for $420 per share, and that investor support had been confirmed. It only took a few weeks for Tesla's share price to fluctuate, and Musk's alleged securities fraud was investigated by the Securities and Exchange Commission.

There is a settlement between Musk and Tesla, but neither company admits to any wrongdoing. They each paid $20 million in fines, Musk stepped down as Tesla chairman, and Musk committed not to tweet anything that would affect Tesla's stock price in the future.

A brief was filed by Musk’s lawyers in September 2022 with the Court of Appeals for the purpose of removing Musk from a “government-imposed muzzle” that interfered with the executive’s right to express himself in a lawful manner. Musk’s motion to end the same SEC settlement provision was quashed a month earlier by a federal judge.

As Musk's lawyers argued earlier this week that the jury verdict of a separate trial should be taken into consideration when appealing, the case was dismissed. There was a class action lawsuit brought against Musk in early February by shareholders who lost money as a result of Musk tweeting "funding secured" and who were seeking damages from Musk. Musk was found not liable for securities fraud in the case.

According to Spiro, the SEC is lacking both support for the consent decree as well as its appeal arguments in light of the jury finding that Mr. Musk's tweets did not violate Rule 10b-5. According to the verdict, the public interest in avoiding unconstitutional settlements easily overrides the purported stake of the SEC in the consent decree, as the verdict proves once again.

The appeals court has the decision-making authority to grant supplemental authority to a lawyer if he finds a new legal authority that directly relates to the appeal's issue, and if the new authority has the potential to influence the outcome of the appeal process in a positive way after filing a brief.

SEC rules state that a jury verdict in a private securities fraud case does not qualify as a "pertinent and significant" authority. That is because the jury verdict doesn't qualify as a "pertinent and significant" authority. Furthermore, the agency argued that Musk waived his right to test the Commission's allegations at trial when he voluntarily agreed (twice) to a consent judgment.

There were also questions raised by the SEC's lawyers about the legal basis for undoing the settlement years later, because the ruling did not address the public interest involved with the negotiated settlement and it did not prohibit Musk from tweeting accurately about Tesla or other topics.

There are two possible outcomes for the court in the case of Spiro's letter: either it accepts it or denies it. An oral argument for the appeal is expected to be held in the spring, but no date has been set yet.

Who is Elon Musk?

Elon Musk, the chief executive officer (CEO) of Tesla Inc., has earned him global fame as the CEO of the electric automobile maker. Musk was one of the early investors in several tech companies, and he completed a deal to take Twitter Inc. private in October 2022. He was also the founder of SpaceX, a private space company.

It has been a common occurrence for people to compare him with other colourful tycoons from U.S. history, such as Steve Jobs, Howard Hughes, and Henry Ford, due to his success and personal style. Musk was named the richest person in the world in October 2022 with a net worth estimated at $212 billion. As of 2021, Musk surpasses the founder of Inc. (AMZN) Jeff Bezos in achieving that distinction for the first time.

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About the Creator

Shahid Anwar

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