By
Mayowa Adebajo
April 18th, 2024
Alex Spiro argues that the Elon Musk – SEC deal is moot following the Tesla CEO’s securities fraud trial victory.
An attorney representing Elon Musk has asked a San Francisco federal court to throw out his 2018 deal with the SEC. The deal required that Musk seeks approval for all Tesla-related tweets before posting them on his page. According to Musk’s lawyer Alex Spiro, the Tesla CEO’s recent victory in a securities fraud trial necessitates the deal’s cancellation.
In a class-action securities fraud case, a jury found that Musk and Tesla (NASDAQ: TSLA) were not liable. This trial stemmed from tweets the outspoken billionaire made back in 2018 regarding Tesla’s shares. At the time, Musk sustained a lawsuit from irate Tesla shareholders for roiling the EV company’s stock volatility.
The plaintiffs alleged in August 2018 that Musk announced plans to take Tesla private and had “funding secured.” According to reports at the time, the brash Tesla CEO planned to take the EV automaker private for $420 a share. Musk also allegedly suggested that he had investor support for the deal.
Elon Musk – SEC “Twitter Sitter” Deal
Although Musk eventually won the ensuing deal, a seemingly impedimental agreement with the Securities and Exchange Commission materialized. This agreement, which Spiro wants to be removed now, requires a company securities attorney to review all Musk’s Tesla-related tweets. The securities lawyer has to review said tweets to see if they contain material business information before Musk can share them.
In a petition to the courthouse, Spiro wrote:
“In light of the jury’s finding that Mr. Musk’s tweets did not violate Rule 10b-5, the SEC lacks support both for the consent decree itself and for its arguments on appeal. The jury’s verdict provides further reason why the public interest in avoiding unconstitutional settlements easily subsumes the SEC’s purported stake in the consent decree.”
Further arguing on the need to scrap the Elon Musk-SEC deal, the Quinn Emanuel Partner also added that “likewise, the jury’s verdict confirms the propriety of applying the unconstitutional conditions doctrine, which prohibits deals achieved “through gimmickry, which converted a valid [settlement] into ‘an out-and-out plan of extortion.’”
Lawyers representing the plaintiffs could still file for an appeal.
Pending Twitter CEO Appointment
A week ago, Musk announced the date for the possible appointment of a new Twitter chief executive officer. According to him, a new Twitter CEO could be appointed by the end of this year. Since the Tesla CEO took over the microblogging giant, its revenue has declined tremendously as advertisers have paused campaigns.
Speaking on a potential Twitter successor at the World Government Summit in Dubai, Musk said:
“I’m guessing probably towards the end of this year should be good timing to find someone else to run the company because I think it should be in a stable position around the end of this year.”
However, the billionaire businessman stressed the imperativeness of making sure that Twitter is financially stable before the successor’s appointment.
Although Twitter currently weathers declining revenue, Musk has proposed several ways through which the company could increase its earning potential. These suggestions include charging users for premium account verification (Twitter Blue) and charging developers for API access.
Musk remains committed to monetizing Twitter to the hilt as part of broader plans to make the platform profitable.