The tension between Tesla CEO Elon Musk and the U.S. Securities and Exchange Commission reached a new milestone Tuesday when the eccentric founder filed a motion in Manhattan federal court seeking to terminate a September 2018 consent decree over his use of Twitter, claiming the agreement stifles his constitutional right to “speak his mind in public.”
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The SEC originally accused Musk of misleading shareholders in 2018 with claims on Twitter that he had secured funding to take Tesla private at $420 per share.
“I never lied to shareholders. I would never lie to shareholders. I entered into the consent decree for the survival of Tesla, for the sake of its shareholders,” Musk told U.S. District Judge Alison Nathan in a court filing.
The settlement called for $20 million in civil fines from both Tesla and Musk, as well as a requirement for a securities attorney to audit and vet Musk’s tweets and other digital communications. The largest takeaway from the ordeal was Musk relinquishing his Tesla chairmanship.
Musk’s request for a court hearing on the matter was denied on Feb. 24, leading him to ask Tuesday for the consent decree to be terminated and for the court to quash a recent SEC subpoena tied to Musk’s Twitter poll from 2021 about selling 10% of his Tesla stake.
“The equities strongly favor terminating the consent decree, which the SEC has used to trample on Mr. Musk’s First Amendment rights and to impose prior restraints on his speech,” the motion claims. “Contrary to the SEC’s conception, the consent decree is not a charter for subjecting Mr. Musk to unwarranted scrutiny for exercising his constitutional right to speak his mind in public.”
Musk said in the new filing that he withdrew his consent to settle in September 2018 after he learned that the SEC decree could require his companies Tesla, SpaceX, the Boring Company and Neuralink “to either seek a publicly accessible waiver letter regarding the SEC’s allegations or risk their future ability to raise money” through some offerings. This action prompted the SEC to file a complaint.
Musk noted that as soon as he learned from Tesla’s investor relations team that several of the electric vehicle company’s largest shareholders “could cede their ownership in Tesla – substantially impacting financing – if the case was not settled expediently,” he decided to settle.
He said the decision was made to assure “immediate survival of Tesla.”
Musk and Tesla accused the SEC of harassing them with “endless” and “unrelenting” investigations, punishing Musk for being an outspoken critic of government and its control of companies.
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