The Securities and Exchange Commission (SEC) has confirmed that Tesla CEO Elon Musk still requires attorneys to pre-approve tweets related to the automaker. This comes after the SEC investigated Musk in 2018 when he tweeted that he had “secured funding” to take Tesla private at $420 per share – causing volatility in Tesla’s stock price. The EV maker and Musk settled separately with the SEC for $20 million, but admitted no wrongdoing.
Despite this, TechCrunch reports that Musk’s lawyers recently tried to end what they called a “government-imposed muzzle” during his speech, stating that a recent jury verdict supported the appeal.
In that case, jurors found that Musk’s tweets were not inconsistent Rule 10b-5 — issued in 2000 to clarify the definition of insider trading — and the SEC’s appeal arguments lacked support. However, the SEC disagreed with Musk attorney Alex Spiro’s argument that winning the case conferred relevant authority, arguing instead that a jury verdict in a private action for securities fraud does not apply. If they find new jurisdiction directly related to the issue raised on appeal, attorneys can file that as part of the support of an appeals court.
The SEC’s ongoing battle with Musk may raise questions about protecting free speech in corporate governance. Still, the SEC argues that shareholders need attorneys to pre-approve tweets related to Tesla because they need accurate information about their investments. The agency believes pre-approval of Musk’s tweets can help ensure the correct information is released.
