After being found not responsible for securities fraud stemming from a 2018 tweet claiming he had funding to take Tesla private, Elon Musk is once again trying to evade his “Twitter sitter” consent decree. America’s financial watchdog, the Securities and Exchange Commission, has none of that.
The consent decree is an agreement with the SEC signed by Musk and his team in 2019 that he will allow a securities attorney to verify his tweets related to Tesla finances, production numbers and other sensitive information before he makes a statement. press the blue send button.
This lawyer is supposed to stop the big-mouthed SpaceX supremo from tweeting stuff about his automaker that could, perish the idea, mislead investors. This consent decree stemmed from an earlier settlement between the SEC and Musk regarding this 2018 funding tweet.
In a letter (PDF) to the SEC this week, Musk’s attorneys argued that in light of the verdict of a separate class action lawsuit filed against Musk by shareholders, which cleared him of all liability , the SEC lacked support for its consent to audit tweets. decree.
The verdict further substantiates, Musk’s lawyers asserted, “why the public interest in avoiding unconstitutional settlements easily subsumes the alleged SEC stake in the consent decree,” and that it also means that the “terms doctrine unconstitutional” can be applied to relieve Musk of his legal power. obligations.
According to the billionaire’s lawyers, the doctrine of unconstitutional conditions “prohibits agreements reached” through, which converted a valid (settlement) into “a plan of outright extortion”.
The SEC didn’t mince words in its response (PDF) to Musk’s attorneys, saying the “verdict has no bearing” on the legitimacy of the consent decree, and that it says nothing “about the continued public interest of a negotiated settlement term that does not preclude Musk from tweeting precisely about Tesla or other topics.”
Beyond that, the SEC claimed Musk had no legs to stand on, since he waived his right to challenge the consent agreement when he voluntarily agreed to it — twice.
Musk wants to break free
Musk and his legal team have argued against the consent decree in the past and tried to have it overturned last year, but lost in that case as well.
Last year’s appeal failed on similar grounds, District Court Judge Lewis Liman said, namely that Musk was not coerced into entering into the consent decree, but instead done “for (his) own strategic purposes … voluntarily, in order to secure the benefits thereof, including finality” in the SEC’s original lawsuit against him over the 2018 tweet.
The consent decree stemmed from the $40 million settlement Musk paid in the case, which included conditions requiring him to resign as Tesla chairman and agree to have an attorney review all Tesla-related tweets. .
“Musk can’t now seek to withdraw the deal he knowingly and willingly entered into just lamenting that he felt like he had to agree to it at the time, but now…wishes he didn’t. didn’t,” Liman said last year.
Musk’s attorneys requested oral arguments on the appeal, but it doesn’t appear a date has been set. ®