Elon Musk demands to end SEC tweet pre-approval

• Elon Musk is suing the US Securities and Exchange Commission (SEC) over a pre-approval requirement for some of his Twitter posts.
• His attorneys argue that the rule went against American values of free speech and violated the US Constitution.
• Musk is suing Twitter over his April deal to buy the company for $44 billion.

Elon Musk’s attorneys argued before a federal appeals court that a clause in his 2018 consent agreement with the US Securities and Exchange Commission (SEC) should be struck down because it mandated that a Tesla Inc lawyer review some of his Twitter statements.

The pre-approval requirement was referred to by Musk’s attorneys as a “government-imposed muzzle” in a brief that was sent late on Tuesday to the 2nd US Circuit Court of Appeals in Manhattan.

This restriction prevented Musk from exercising his right to free expression on a variety of subjects.

In addition, they said that the rule went against American values of free speech and open debate and violated the US Constitution.

An outside-of-market hours inquiry for comment received no immediate response from the SEC. It’s anticipated that it will submit its own brief to the appeals court.

Musk is attempting to overturn a portion of US District Judge Lewis Liman’s ruling on April 27 that denied his request to completely invalidate the consent decree.

Since “his corporation has become, in his perspective, all but indestructible,” Liman claimed that Musk’s comments amounted to a “bemoaning” of requirements he no longer wished to follow.

According to Forbes magazine on Wednesday, Musk, 51, is worth $259.8 billion, which is nearly twice as much as anyone else.

A lawsuit against Musk for allegedly misleading investors by tweeting on August 7, 2018, that he had “funding secured” to take his electric car firm private, even though a buyout was not imminent, was concluded by the decree.

According to Musk, the tweet was accurate.

As part of the settlement, Musk consented to let a Tesla attorney review tweets for any potential significant information about the business.

Additionally, Musk and Tesla each paid $20 million in civil penalties, and Musk resigned as chairman of Tesla.

But after Musk questioned his followers in a tweet on November 6, 2021 whether he should sell 10% of his Tesla ownership to pay tax liabilities on stock options, the SEC later started an investigation and demanded records pertaining to Musk’s and Tesla’s compliance.

In their petition on Tuesday, Musk’s attorneys said that the SEC needed to be controlled.

“Under the shadow of the consent decree, the SEC has increasingly surveilled, policed, and attempted to curb Mr. Musk’s protected speech that does not touch upon the federal securities laws,” the lawyers wrote.

“Any objective served by the pre-approval provision has been served.”

Separately, Musk is attempting to back out of his April deal to purchase Twitter for $44 billion, claiming the company misled him by understating the number of false accounts.

To compel him to execute the merger at the agreed-upon price, which is 23% more than where its shares ended trading on Tuesday, Twitter has filed a lawsuit against Musk. Delaware Chancery Court has scheduled a nonjury trial for October 17.

Musk v. SEC, 2nd US Circuit Court of Appeals, No. 22-1291, is the name of the case.

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