DETROIT (AP) — The U.S. Securities and Exchange Commission is denying allegations that it is violating Elon Musk’s free speech rights by trying to enforce a 2018 securities fraud settlement.
The commission, in an appeals brief filed late Thursday, said Musk, the chief executive of Tesla, waived his First Amendment rights by agreeing to the settlement and amendments. It also rejected Musk‘s argument to scrap the agreement because he signed it under financial duress and didn’t understand it.
“Musk’s agreement protects investors by ensuring that the information the public uses to make decisions about Tesla securities is accurate and consistent with what Tesla reports,” the agency’s brief said.
The funding was far from locked up, and the electric vehicle company remains public, but Tesla’s stock price then jumped. The stock now trades around $122. The settlement specified governance changes, including Musk’s ouster as board chairman, as well as pre-approval of his tweets by a Tesla lawyer.
In April, U.S. District Judge Lewis Liman in New York rejected Musk’s bid to throw out the settlement. He also denied a motion to nullify a subpoena of Musk seeking information about possible violations.
In his filing with the Second Circuit Court of Appeals, Musk lawyer Alex Spiro contended that the SEC is unlawfully muzzling the Tesla CEO, violating his free speech rights by continually trying to enforce the settlement.
Musk’s appeal brief filed in September says the provision requiring prior approval before tweeting about the electric car company is an illegal “government-imposed muzzle on Mr. Musk’s speech before it is made.”
But the SEC said in its response that Musk “knowingly and voluntarily waived any First Amendment rights” by signing the settlement.
The settlement, the SEC wrote, doesn’t stop Musk from tweeting about Tesla or other matters, and it doesn’t place the court or the SEC in a position to review his tweets before publication. “Rather, it required him to adhere to Tesla’s policies regarding oversight of material Tesla-related communications. It had no bearing on tweets or other communications unrelated to Tesla,” the SEC wrote.
In his appeal brief, Musk attorney Alex Spiro contends that the SEC is continually investigating Musk for topics not covered by the settlement. It asks the court to strike or modify the prior approval provision.
Further, Musk’s speech is chilled by the threat of SEC investigations and prosecution for contempt of court, the brief said.
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