CEO Elon Musk wants out of Tesla tweet jail. Lol, no, says SEC
- Reference: 1677274207
- News link: https://www.theregister.co.uk/2023/02/24/musk_tesla_consent_decree_sec/
- Source link:
The consent decree is an agreement with the SEC signed by Musk and his team in 2019 that he will allow a securities lawyer to vet his tweets related to Tesla's financials, production numbers, and other sensitive info before he presses the blue send button.
That lawyer is supposed to stop the loudmouth SpaceX supremo from tweeting stuff about his automaker that might, perish the thought, mislead investors. That consent decree stemmed from an earlier [1]settlement between the SEC and Musk over [2]that 2018 funding tweet.
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In a [4]letter [PDF] to the SEC this week, Musk's lawyers argued that in light of the [5]verdict from a separate class-action suit brought against Musk by shareholders, which cleared him of liability, the SEC lacked support for its tweet-vetting consent decree.
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The verdict further justifies, Musk's lawyers asserted, "why the public interest in avoiding unconstitutional settlements easily subsumes the SEC's purported stake in the consent decree," and that it also means the "unconstitutional conditions doctrine" can be applied to relieve Musk of his legal obligations.
According to the billionaire's lawyers, the unconstitutional conditions doctrine "prohibits deals achieved 'through gimmickry, which converted a valid [settlement] into 'an out-and-out plan of extortion'."
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The SEC didn't mince words in its [9]response [PDF] to Musk's lawyers, saying "the verdict has no bearing" on the legitimacy of the consent decree, nor does it say anything "about the continuing public interest in a negotiated settlement term that does not preclude Musk from tweeting accurately about Tesla or other topics."
Beyond that, the SEC claimed that Musk doesn't have a leg to stand on, since he waived his right to challenge the consent agreement when he voluntarily agreed to it – twice.
Musk wants to break free
Musk and his legal team have [10]railed against the consent decree in the past and attempted to get it overturned last year, but [11]lost in that case , too.
[12]Musk, Tesla win securities fraud battle over that 'funding secured' tweet
[13]Elon Musk shows what being Chief Twit is all about across weird weekend
[14]Musk grumbles about 'overpaying' for Twitter but says he's excited
[15]Twitter algorithm to be open sourced 'next week,' says Musk
The appeal last year failed on similar grounds, district court judge Lewis Liman said, namely that Musk wasn't forced to enter into the consent decree, and instead did it "for [his] own strategic purposes … voluntarily, in order to secure the benefits thereof, including finality" in the SEC's original lawsuit against him for the 2018 tweet.
The consent decree stemmed from the $40 million settlement Musk paid in that case, which included conditions requiring him to step down as Tesla chairman and accept having a lawyer review all Tesla-related tweets.
"Musk cannot now seek to retract the agreement he knowingly and willingly entered by simply bemoaning that he felt like he had to agree to it at the time but now … wishes that he had not," Liman said last year.
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Musk's attorneys have asked for oral arguments in the appeal, but it doesn't appear a date has been set. ®
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[1] https://www.theregister.com/2018/09/27/sec_musk_tweet/
[2] https://apnews.com/article/elon-musk-technology-san-francisco-lawsuits-business-dc203e6eefa40cb29db82d31308b372a
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y-lBkU1gXXq5MqayImck-gAAAIw&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://regmedia.co.uk/2023/02/24/musk-letter-to-sec-twitter-sitter.pdf
[5] https://www.theregister.com/2023/02/04/musk_tesla_civil_fraud_trial_verdict/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y-lBkU1gXXq5MqayImck-gAAAIw&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y-lBkU1gXXq5MqayImck-gAAAIw&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y-lBkU1gXXq5MqayImck-gAAAIw&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://regmedia.co.uk/2023/02/24/sec-letter-to-musk-twitter-sitter.pdf
[10] https://www.cnbc.com/2023/02/23/sec-rebuffs-musks-attempt-to-get-out-of-funding-secured-settlement.html
[11] https://www.theregister.com/2022/06/15/musk_tweet_court/
[12] https://www.theregister.com/2023/02/04/musk_tesla_civil_fraud_trial_verdict/
[13] https://www.theregister.com/2022/10/31/elon_musk_chief_twit_acts/
[14] https://www.theregister.com/2022/10/20/musk_overpaying_twitter/
[15] https://www.theregister.com/2023/02/22/twitter_algorithm_to_be_open/
[16] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y-lBkU1gXXq5MqayImck-gAAAIw&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[17] https://whitepapers.theregister.com/
Ok, let's look at the source code:
"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
And pseudo-code the relevant snippet:
"Government agents shall not create rules which criminalize speech //throws an exception in specific cases, see SupremeCourt.cpp"
So the points of issue are really whether A: this is a rule and B: it criminalizes his speech.
Point A, is a contract a rule? It's easy to say that this is irrelevant because he agreed to it, but I don't think that totally resolves the question (not all agreements are legally recognized, even when both parties consent with full knowledge). I wouldn't blame you for saying no, but I find myself spinning around in circles pondering it.
Point B, does it criminalize his speech? I believe that the charges were criminal and not civil, so lets say that had he not agree that would have meant criminal charges. One could argue, and I'm not claiming to back this, that in effect the SEC was extorting a restriction of his free speech under thread of criminal law, which indirectly means that the SEC was "criminalizing" the speech being restricted. One could equally argue for the other side that Elon was handed a get out of jail free card. If the SEC couldn't offer such consent decrees as an option that it would increase the likihood of people being prosecuted as criminals; thus, how can it possibly be seen as a criminalization if it offers options to REDUCE criminal liability?
Somewhere down in the bowels of this nonsense are some interesting legal questions to chew on.
He also is moving,
I am not here to vilify him as a- person. I'm here to question him on many sites, on many instances. He does not seem to know right from wrong. I can help. I am sure you know how. It's ok. I'm not trying to hurt you. You are just doing it wrong. Get with me the hard way if serious: I just want to do no evil.