By
Temitope Olatunji
April 23rd, 2024
According to the lawyer, the 2018 deal should not be a means to conduct “roving and unbounded investigations” on Musk.
SpaceX founder and Tesla (NASDAQ: TSLA) CEO Elon Musk is seeking to end the agreement he had with the SEC regarding the pre-approval of his tweets before he posts them. On the 8th of March, the billionaire asked a federal judge to abort his 2018 agreement with the regulator that requires some of his tweets to be vetted by a lawyer before they go public. Musk wants free rein over his tweets, and the SEC is not letting him as he is capable of moving the markets.
Over time, the Tesla CEO has impacted the stock markets with what he posts on Twitter (NYSE: TWTR). Among Musk’s fans and 77 million Twitter followers are several investors who react to the information he passes through his tweets. As a result, securities regulators had to come to an agreement with Musk and Tesla. The agreement with the SEC requires Musk to receive approval before posting tweets. However, the SEC is not certain if the billionaire or the automaker has been complying with the deal.
In a November tweet, the CEO asked his followers whether or not to sell 10% of his Tesla shares. He created a poll where people voted. He also promised to follow the conclusion of the vote, regardless of whatever answer it may be. Shortly after the poll, Tesla got a subpoena about if the company has been living up with the terms of the 2018 deal.
Musk Tackles SEC Over Pre-Approved Tweets
In reaction, Musk’s lawyers filed a motion in Manhattan federal court, asking the federal Judge to scrap the entire agreement. The lawyers argue that the Twitter pre-approval policy has been unworkable.
According to the lawyer, the 2018 deal should not be a means to conduct “roving and unbounded investigations” on Musk. In the motion written to US District Judge Alison Nathan, the lawyer stated:
“The SEC’s pursuit of Mr. Musk has crossed the line into harassment, which is quintessential bad faith.
However, legal analysts believe Musk’s request to end the consent decree may not work out. A professor of law at Georgetown University Law Center, Urska Velikonja, said:
‘The SEC clearly has authority to enforce a consent decree issued by a federal court without having to conduct a new investigation. Apart from concerns that the consent decree is overbroad and difficult to enforce, which seem plausible, Musk’s other legal arguments are an exercise in legal silliness.”
The 2018 agreement happened after Musk tweeted that he had secured the funding required to take Tesla private. As a result of the tweet, the SEC charged him with securities fraud. Now, the CEO has issued a separate filing, saying he was coerced into the settlement. He added that he “never lied to shareholders,” and he would never do that. According to him, he agreed to the consent decree for the sake of shareholders and Tesla’s survival.