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Elon Musk Appeals to Supreme Court to Overturn SEC's 'Twitter Sitter' Agreement

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Elon Musk Appeals to Supreme Court to Overturn SEC's 'Twitter Sitter' Agreement

Tesla CEO Elon Musk is seeking relief from the U.S. Supreme Court, aiming to reverse a settlement agreement with the Securities and Exchange Commission (SEC) that requires a company lawyer, known as a "Twitter sitter," to review and approve his Tesla-related tweets. In a petition filed on December 7, Musk's legal team argued that the provision violated his free speech rights and accused him of agreeing to "unconstitutional conditions" under coercion.

The SEC's Securities Fraud Charges

The SEC charged Musk with civil securities fraud after he posted tweets in 2018 claiming to have secured funding to take Tesla private at $420 per share, with confirmed investor support. These tweets caused trading in Tesla to be halted and resulted in volatile share prices. Musk and Tesla initially settled with the regulator, revising the agreement in April 2019. However, the SEC has continued to investigate Musk and Tesla to ensure compliance with the terms.

Restrictions on Musk's Speech

Musk's lawyers argue that the settlement agreement restricts his speech, even when it is truthful and accurate, extending beyond the scope of securities laws and unrelated to the SEC's civil action against him. They contend that the agreement poses a constant threat of contempt, fines, or imprisonment for protected speech that is not pre-approved by the SEC or a court.

The Legal Battle and Potential Implications

Legal experts have described Musk's appeal to the Supreme Court as a high-stakes move. A circuit court has already declined to hear the case, so Musk would need the support of four out of the nine justices to secure a hearing. The argument centers around the "unconstitutional conditions" doctrine, typically applied when the government offers public benefits contingent on certain actions. However, some experts believe this case differs, as it involves the government refraining from pursuing charges in exchange for cooperation with settlement terms.

Considerations for Musk and the SEC

While the SEC has not yet responded to the request for comment, Tesla investors have separately sued the company and Musk over the impact of the "funding secured" tweets on stock prices. In a previous class-action securities fraud trial, Musk and Tesla were found not liable. However, the shareholders have filed an appeal to the 9th Circuit. In conclusion, Elon Musk's appeal to the Supreme Court reflects his determination to challenge the SEC's settlement agreement and the restrictions it imposes on his speech. The outcome of this legal battle could have significant implications for the boundaries of free speech and the extent of regulatory oversight in the corporate world.

Elon Musk's Supreme Court Appeal: Implications for New Businesses

Tesla CEO Elon Musk's appeal to the Supreme Court to overturn a settlement agreement with the Securities and Exchange Commission (SEC) provides a valuable lesson for new businesses. This case underlines the power of regulatory bodies and the potential impact of social media communications on a company's legal standing.

The Power of Regulatory Bodies

The SEC's ability to charge Musk with civil securities fraud and enforce a settlement agreement that restricts his social media communications highlights the significant influence of regulatory bodies. For startups, this serves as a reminder of the importance of regulatory compliance and the potential consequences of non-compliance.

The Role of Social Media in Business Communications

Musk's case underscores the potential legal implications of social media communications for businesses. His tweets, which led to charges of securities fraud, demonstrate how social media can significantly impact a company's legal and financial standing.

Freedom of Speech and Business Communications

The argument by Musk's lawyers that the settlement agreement violates his free speech rights raises questions about the boundaries of free speech in business communications. This could have implications for new businesses in terms of how they navigate the balance between freedom of speech and regulatory compliance. In essence, Musk's appeal to the Supreme Court provides a roadmap for new businesses, highlighting the importance of regulatory compliance, the potential legal implications of social media communications, and the ongoing debate over the boundaries of free speech in the business world.
Story First Published at: https://www.cnbc.com/2023/12/07/elon-musk-asks-scotus-to-undo-sec-twitter-sitter-agreement.html
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