Getty Images | Bloomberg
Elon Musk plans an appeal to the US Supreme Court after losing an attempt to finalize a settlement with the Securities and Exchange Commission that Musk claims violates his First Amendment rights. The 2018 settlement over Musk’s fake “hedge fund” posts required Tesla to put controls on its social media posts.
“Alex Spiro, a lawyer for Musk, confirmed on Tuesday that Musk plans an appeal to the Supreme Court,” according to Reuters.
In April 2022, Musk’s attempt to vacate the settlement was denied by a judge in the US District Court for the Southern District of New York. Musk appealed to the US Court of Appeals for the 2nd Circuit, but the ruling against Musk was unanimously affirmed by a three-judge panel.
Musk then made a request for one at the bank being reheard before all judges of the 2nd Circuit Court, but his appeal was denied in a brief order issued yesterday by the court. “The active members of the Court have reviewed the request for rehearing at the bank. It is ordered that the petition be denied,” the ruling states. The 2nd Circuit Court of Appeals has 13 active members.
The only option left for Musk is the Supreme Court, but there is no guarantee that the highest court will take up the case.
The same tweets that led to Musk’s SEC settlement were also considered in a class action lawsuit against Musk and Tesla seeking financial damages for Tesla shareholders. The judge in that case ruled that Musk’s tweets about securing funds to take Tesla private were false and reckless, but it was up to a jury to decide whether Musk knew the tweets were false and whether they caused Tesla investors to lose money. The jury sided with Musk in February 2023.
Musk needs Tesla’s approval for tweets
The SEC case began after Musk’s August 2018 tweets said, “I’m considering taking Tesla private at $420. Funding secured” and, “Investor support confirmed. Only reason it’s not certain is it depends on shareholder vote.”
The SEC sued Musk and Tesla, saying the tweets were false and “led to significant market disruption.” The settlement required Musk and Tesla to each pay $20 million in fines and forced Musk to step down as chairman. That money will be distributed to injured investors under a plan approved by the court last year.
Musk was also required to obtain Tesla’s prior approval for tweets or other social media posts “that contain, or reasonably may contain, informational material about the Company or its shareholders.”
Musk alleged that the SEC used the consent decree to “micro-manage” his Twitter activity, that he was “forced” to sign the agreement and that his “First Amendment freedoms are at risk.” The SEC “has weaponized the consent decree by using it to attempt to bully and bully Mr. Musk and Tesla,” Spiro wrote in a court filing last year.
In ruling against Musk, U.S. District Judge Lewis Liman called the claim that the SEC is harassing him “meritless” and wrote that “Musk’s free speech rights do not allow him to engage in speech that is or could be ‘considered deceptive or otherwise in violation of securities laws.'”
Musk bought Twitter in October 2022 and is the CEO of Tesla and SpaceX.
