As a result of settling civil securities fraud charges in 2018, tweets and other published statements from Elon Musk about information critical to Tesla have had to be pre-approved by a lawyer. The original decision was upheld on Monday, May 15th, 2023, by a federal court of appeals.
Musk objected that the consent decree, which mandated the pre-approval was a violation of his right to free speech and argued that the changed circumstances required the decree to be “modified or terminated.”
The complaint by the SEC at the time charged him over tweets about considering taking Tesla private “at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price.” Elon settled with the SEC and made the agreement.
It said that Musk and “certain senior executives” needed prior approval from “Tesla’s General Counsel or an in-house securities lawyer” before publishing statements that contained “information material to [Tesla] or its shareholders.” In 2019, the “material to” language was adjusted, instead specifying a list of subjects that would need prior approval.
A judge eventually found the statements Musk made on Twitter to be false. However, when investors sued Musk, saying they incurred losses due to his tweets, Elon was found “not liable.”
When considering Musk’s argument to modify or throw out the consent decree, the judges in the federal court of appeals found that the SEC made “limited, appropriate inquiries” that were in line with what Musk could have “reasonably anticipated when [he] agreed to the consent decree’s terms.”
“Had Musk wished to preserve his right to tweet without even limited internal oversight concerning certain Tesla-related topics, he had ‘the right to litigate and defend against the [SEC’s] charges’ or to negotiate a different agreement — but he chose not to do so,” the court of appeals said in their summary order. “Having made that choice, he may not use Rule 60 to collaterally reopen a final judgment merely because he has now changed his mind.”