Elon Musk's appeal to end ‘Twitter sitter’ deal for Tesla posts rejected by US court
2 min read 16 May 2023, 04:27 PM ISTThe settlement in 2018 was done citing tweets by Elon Musk on micro blogging platform Twitter, which he now owns, wherein Musk had mentioned that he had secured funding to take Tesla private, which in turn caused the electric vehicle maker's share price to jump.
PremiumA US Federal Appeals Court has rejected Tesla Chief Elon Musk's plea to get out of the settlement he had made in 2018 with US Securities and Exchange Commission, which required him to get all tweets regarding Tesla pre-approved by a lawyer.
The settlement in 2018 was done citing tweets by Elon Musk on micro blogging platform Twitter, which he now owns, wherein Musk had mentioned that he had secured funding to take Tesla private, which in turn caused the electric vehicle maker's share price to jump.
This further led to a temporary halt in trading in 2018.
The US Securities and Exchange Commission sued, claiming Elon Musk and Tesla had misled shareholders. Musk and Tesla settled with the SEC, with each paying $20 million and agreeing that Musk’s Tesla-related tweets would be reviewed before he posts them.
The court in Manhattan on Monday ruled against Musk’s free speech claims just days after a three-judge panel heard arguments in the case on Thursday.
Musk, Tesla’s chief executive officer and now the owner of Twitter Inc., had claimed that the agreement with the US Securities and Exchange Commission violates the First Amendment to the Constitution and that the SEC is harassing him.
The requirement “chills Mr. Musk’s speech," limiting his ability to make statements about Tesla that don’t violate any securities laws, Ellyde R. Thompson, an attorney representing the Tesla CEO, told the panel.
The court quickly rejected those arguments in a seven-page order, according to Bloomberg.
The 2018 settlement with the US Securities and Exchange Commission required that Elon Musk's tweets be approved first by a Tesla attorney. It also called for Elon Musk and Tesla to pay civil fines over the tweets in which Elon Musk said he had ‘funding secured’ to take Tesla private at $420 per share.
The funding was never secured and Tesla remains public.
Musk and Tesla settled with the SEC, with each paying $20 million and agreeing that Musk’s Tesla-related tweets would be reviewed before he posts them.
Last year, US District Judge Lewis Liman refused to release Musk from the deal and end his “Twitter Sitter" requirement, saying the CEO was “simply bemoaning that he felt like he had to agree to it at the time" and now “wishes that he had not." Liman also denied Musk’s effort to block an SEC subpoena seeking information on his tweets.
Notably, the SEC is a;so investigating whether the Tesla CEO's November 2021 tweets asking Twitter followers if he should sell 10% of his Tesla stock violated an October 2018 settlement that Musk signed after the SEC brought an enforcement
action against him alleging that his tweets about going private violated antifraud provisions of securities laws.
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