SEC says it's not violating Elon Musk's right to free speech

DETROIT (AP) — The U.S. Securities and Exchange Commission is denying allegations that it is violating Elon Musk's free speech rights by trying to enforce a 2018 securities fraud settlement.

The commission, in an appeals brief filed late Thursday, said Musk, the chief executive of Tesla, waived his First Amendment rights by agreeing to the settlement and amendments. It also rejected Musk's argument to scrap the agreement because he signed it under financial duress and didn't understand it.

And the SEC argued that doing its job in the interest of shareholders and markets outweigh Musk's interest in being able to tweet about Tesla without Tesla's approval.

“Musk's agreement protects investors by ensuring that the information the public uses to make decisions about Tesla securities is accurate and consistent with what Tesla reports,” the agency's brief said.

The dispute stems from an October 2018 agreement with the SEC that Musk signed involving his statements on Twitter, which Musk this year purchased for $44 billion.

Musk and Tesla each agreed to pay $20 million in civil fines over Musk’s tweets about having the “funding secured” to take Tesla private at $420 per share.

The funding was far from locked up, and the electric vehicle company remains public, but Tesla’s stock price then jumped. The stock now trades around $122. The settlement specified governance changes, including Musk’s ouster as board chairman, as well as pre-approval of his tweets by a Tesla lawyer.

In April, U.S. District Judge Lewis Liman in New York rejected Musk’s bid to throw out the settlement. He also denied a motion to nullify a subpoena of Musk seeking information about possible violations.

Limon’s ruling said that Musk made the tweets without getting pre-approval, but the judge later wrote...