Tesla CEO Elon Musk's bid to terminate an agreement with the Securities and Exchange Commission was struck down by a federal judge Wednesday, rejecting Musk's assertion that his free speech had been suppressed.
The judge also thwarted Musk's request to dismiss part of a newer subpoena by the federal financial regulators, according to CNBC.
Musk's attorneys suggested the previous settlement agreement — which reportedly came after the SEC charged Musk with securities fraud in September 2018 — had limited the CEO's right to free speech, a notion refuted by Judge Lewis J. Liman.
In his dissenting decision, Liman rejected the SEC's "broad power" to ensure that securities laws are followed.
"The mere fact that SEC brought an action against Musk and a related action against Tesla for Musk's tweets in August 2018 does not waive the SEC's sovereign immunity with respect to an investigation the SEC launched in late 2021 regarding conduct that occurred in late 2021, after the 2018 case was settled," Liman wrote.
Musk attorney Alex Spiro argued that the SEC had misused the settlement as a pretext to launch an "endless, boundless investigation" of Musk's speech, a notion that Liman rejected.
"Musk, by entering into the consent decree in 2018, agreed to the provision requiring the pre-approval of any such written communications that contain, or reasonably could contain, information material to Tesla or its shareholders. He cannot now complain that this provision violates his First Amendment rights. Musk's argument that the SEC has used the consent decree to harass him and to launch investigations of his speech is likewise meritless," the judge said.
On Monday, Musk — reportedly the world's richest man — grabbed worldwide headlines by purchasing Twitter for $44 billion.
That social media platform, however, is also partly responsible for Musk's latest dispute with the SEC.
Financial regulators had previously charged Tesla and Musk for making "false and misleading" statements to investors when the CEO announced on Aug. 7, 2018, via Twitter, that he was contemplating taking Tesla private at approximately $420 a share.
Musk had also informed investors that the funding was "secured."
After that tweet was posted, Tesla's stock price in August 2018 reportedly increased by more than 6%.
But Tesla's trading subsequently halted that day, and its shares became volatile in the coming weeks, according to CNBC.
As part of the SEC settlement, Tesla and Musk each agreed to pay a $20 million fine.
Musk also had to cede his role as Tesla chairman for three years and agree not to claim innocence or publicly deny the allegations of the SEC complaint.
Also, Tesla and Musk reportedly agreed to have Musk's tweets vetted by an experienced securities lawyer before posting — whenever such tweets contained business information that could potentially affect Tesla's share price in the open market.
The terms of that final part of the agreement, however, didn't have a long shelf life.
On Nov. 6, 2021, Musk tweeted a poll to his massive Twitter following — 86.7 million, at last count — with the following note: "Much is made lately of unrealized gains being a measure of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?"
Musk then added, "I will abide by the results of this poll, whichever way it goes."
Shortly thereafter, the SEC reportedly subpoenaed Musk and his brother Kimbal Musk (also a Tesla board member), as a means of exploring whether Elon Musk had violated the settlement terms.
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