October 3, 2023

This agreement requires Musk to get prior approval from a Tesla lawyer for some of his tweets.

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Elon Musk can’t back out of a deal with securities regulators that was reached after his 2018 tweets claiming he got funding to privatize Tesla caused the electric car maker’s share price to jump and lead to a temporary shutdown. bidding, ruled the Court of Appeal. .

That settlement with the Securities and Exchange Commission (SEC) required Musk to get prior approval from Tesla’s lawyer for some of his tweets.

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The brief order, issued on Monday by the US Court of Appeals for the Second Circuit in Manhattan, was released days after a three-judge panel heard arguments from lawyers in the case.

The order also called on Musk and Tesla to pay civil penalties for tweets in which Musk said he had “funding secured” to take Tesla private at $420 a share.

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Funding has not been secured and Tesla remains public.

Last year, Musk challenged a lower court judge’s decision requiring him to comply with the terms of the deal, on the grounds that circumstances had changed and because the order contained “prior restraints” that Musk claimed violated the First Amendment.

In an effort to remove the pre-approval mandate, Musk’s lawyers called the restriction a “government-imposed muzzle” that chilled his speech on a wide range of topics.

The appeals court said that Musk could have negotiated a settlement that would have kept his unrestricted right to the tweet, but he chose not to and had no right to reconsider the matter “because he has now changed his mind.”

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In its ruling, the appeals court said it saw “no evidence to support Musk’s contention that the SEC used the consent ruling to conduct unfair, harassing investigations into his protected speech.”

Instead, he said, the SEC launched “only three investigations into Musk’s tweets since 2018,” and each contested tweet “probably violated the terms of the consent decree.”

Lawyers for the case did not immediately respond to messages asking for comment.

The SEC was investigating whether the Tesla CEO’s November 2021 tweets in which he asked Twitter followers if he should sell 10 percent of his Tesla shares, an agreement Musk signed after the SEC filed enforcement action against him, alleging that his tweets about Tesla’s privatization violated antitrust rules. fraud provisions of the securities laws.

In an April 2022 written ruling, Judge Lewis Lymon said that Musk sent the tweets without approval.