Elon Musk‘s appeal to back out of a settlement with the Securities and Exchange Commission (SEC) over tweets he made in 2018 has been denied by a federal appeals court. The tweets claimed he had secured funding to take Tesla private, which caused the company’s share price to rise and led to a temporary halt in trading.
The settlement required that Musk’s tweets be approved first by a Tesla attorney, and that he and Tesla pay civil fines over the tweets. That $40 million in fines took over four years to be paid out to shareholders, something which only happened after Musk questioned why the SEC was still holding on to the funds.
Musk had challenged the 2018 ruling last year, stating that circumstances had changed, and that the settlement contained a “prior restraint” that violated the First Amendment. However, the 2nd U.S. Circuit Court of Appeals in Manhattan on Monday rejected the claim saying there was “no evidence” the SEC had conducted “bad-faith, harassing investigations of his protected speech.” (via Associated Press)
The court ruling also rejected Musk’s prior restraint argument, saying that parties entering into consent decrees may voluntarily waive their First Amendment and other rights. Musk’s deal with the SEC called for him and Tesla to each pay $20 million in fines over Musk’s tweets about having secured funding to take Tesla private.
The ruling comes as Musk faces another investigation by the SEC, this time over tweets he made in November 2021 asking his Twitter followers if he should sell 10% of his Tesla stock. The SEC is investigating whether the tweets violated the October 2018 settlement.