The Securities and Exchange Commission has responded to an attempt by Tesla CEO Elon Musk to appeal a settlement over his “funding secured” tweet in 2018.
In the tweet, the entrepreneur spoke of a possible buyout, and said that the money to do so was already in Tesla’s possession. When it became clear that the company had no intention of going private, both investors and the SEC criticized Musk for causing confusion. After conducting an investigation into the claims, the Commission determined that the funding never actually “secured,” and ultimately charged the CEO with fraud.
To avoid a court battle, Musk reached a settlement with the SEC, which included, among other things, two $20 million fines to be paid by both Tesla and its CEO, and a requirement for the entrepreneur to submit any tweets referencing the automaker’s operations to an internal securities lawyer for review, prior to posting.
Since then, Musk has claimed that he was forced into the settlement, and frequently implied that he ignores the agreed upon review process. After winning a related case, in which investors claimed damages over the same tweet, the CEO and his lawyer, Alex Spiro, have asked the New York Court of Appeals to overturn certain provisions in the SEC’s requirements, alleging coercion and infringements upon the Tesla chief’s first amendment rights. While the New York case is set to start in the coming months, arguments have yet to official start.
Seeking to avoid the case altogether, the SEC offered a written rebuttal of Musk’s appeals request. They noted that the CEO agreed not once but twice to a “consent judgement,” a final decision that cannot be overturned without a dismissal, thus waiving “his opportunity to test the Commission’s allegations at trial…” The court has yet to officially respond, however the burden of proof will rest on Musk’s legal team to demonstrate coercion, which could be an uphill battle.
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