Judge blasts Elon Musk's 'ironic' and 'meritless' bid to tweet about Tesla without a lawyer's approval

Judge blasts Elon Musk's 'ironic' and 'meritless' bid to tweet about Tesla without a lawyer's approval
The Twitter page of Elon Musk is seen on the screen of a computer in Sausalito, California, on Monday, April 25, 2022. On Monday, Musk reached an agreement to buy Twitter for about $44 billion.Eric Risberg/AP Photo
  • A US judge forcefully rejected requests from Elon Musk to soften his agreement with the SEC.
  • Since 2018, Musk has had to have any tweets material to Tesla pre-approved by a lawyer.

Even as Elon Musk is on the verge of becoming the owner of Twitter, he'll still be legally required to run some tweets past his Tesla "Twitter sitter."

In a scathing decision, US District Judge Lewis J. Liman rejected a bid to soften the terms of the agreement Musk has with the US Securities Exchange Commission, which was put in place following Musk's now-infamous "funding secured" tweet in 2018.

The two provisions Musk wanted to be quashed were the subpoena the SEC has in place to investigate Tesla's compliance with its investigations, and the agreement that a company lawyer would pre-approve any public statements (especially on Twitter) by Musk that investors could consider significant.

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Musk has been most vocal about what he has described as a campaign of harassment by the regulatory body, specifically by the San Francisco SEC field office.

But Judge Liman rejected those complaints, pointing to the SEC's broad enforcement mandate and Musk's apparent violations of the agreement.


"Musk may wish it were otherwise, but he remains subject to the same enforcement authority — and has the same means to challenge the exercise of that authority — as any other citizen," he wrote. "Indeed, to conclude otherwise would be to hold that a serial violator of the securities laws or a recidivist would enjoy greater protection against SEC enforcement than a person who had never even been accused of a securities law violation."

In requesting that his public statements about Tesla no longer be subject to review by a company lawyer, Musk invoked the First Amendment, saying that the consent decree amounts to unjust prior restraint on his protected speech.

Musk also argued that the SEC was abusing this rule as a basis to harass him and launch unreasonable investigations into his company. (The agreement covers only material information about Tesla's financial situation that would ordinarily require an 8-K filing with the SEC.)

Judge Liman had little patience for that line of reasoning, calling it "meritless and, in this case, particularly ironic."

Not only do defendants routinely waive portions of their basic rights — including free speech and due process — in the course of settlements, "It is unsurprising," Judge Liman wrote, that when Musk said he would base his decision to sell a tenth of his Tesla shares on the results of a Twitter poll, "the SEC would have some questions."