Saturday, December 3, 2022

Elon Musk, Tesla Accuse SEC Of ‘Calculated Effort’ To Chill His Right To Free Speech

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Topline
Tesla and its CEO Elon Musk accused the Securities and Exchange Commission on Thursday of engaging in a “calculated effort to chill” his right to free speech in its oversight of communications with shareholders, as a part of a settlement stemming from a 2018 tweet in which Musk said he was considering a private buyout of the company.

Elon Musk, Tesla CEO, stands in the foundry of the Tesla Gigafactory during a press event on August … [+] 13, 2021. (Photo by Patrick Pleul/picture alliance via Getty Images)

dpa/picture alliance via Getty Images

Key Facts

A lawyer representing Musk alleged the SEC is targeting Musk with “unrelenting investigation” because he is an “outspoken critic” of the government, according to a letter filed in the Southern District of New York.

Musk and Tesla agreed to a 2018 settlement because they thought it would end the agency’s “harassment” and allow the court to monitor his compliance, but “the SEC has broken its promises,” Musk’s lawyer wrote in the letter. 

The SEC also has not distributed $40 million collected in fines as part of the settlement, according to the letter, and Musk’s lawyers are seeking a conference to address why the agency has withheld the funds.

Tesla previously disclosed the SEC subpoenaed the company for information about compliance with the terms of the settlement.

The SEC did not immediately respond to a request for comment from Forbes.

Key Background
The SEC sued Musk in 2018, alleging he made “false and misleading” statements to investors, after he tweeted in August 2018 he was considering a private buyout of Tesla for $420 a share. The deal never came to light, and Musk had to step down as Tesla’s chairman for at least three years as part of an agreement with the SEC. Musk and Tesla both had to pay $20 million fines, and Tesla had to implement a system to monitor Musk’s public comments regarding the company. As part of the agreement, Musk and Tesla did not admit or deny any wrongdoing.

Crucial Quote
“The SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government,” Musk’s lawyer wrote in the letter. “The SEC’s outsized efforts seem calculated to chill his exercise of First Amendment rights rather than to enforce generally applicable laws in evenhanded fashion.”

Further Reading
Fallout From Elon Musk’s SEC Settlement: A Big Fine, A New Chairman And A Huge Opportunity For Tesla (Forbes)

Elon Musk Tweets Cost Him Tesla Chairmanship And (Maybe) A Submissive Board (Forbes)

Elon Musk’s Net Worth Falls $1.1 Billion As SEC Sues Over ‘False Statements’ (Forbes)

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