LI Network
Published on: 26 July 2023 at 14:42 IST
Elon Musk is set to make an appeal to the U.S. Supreme Court regarding the recent SEC case he lost. The case revolves around the Securities and Exchange Commission’s enforcement of a consent decree that Musk believes restricted his freedom of speech. He referred to the decree as a “muzzle” on his communication.
The dispute stems from a tweet made by Musk in August 2018, where he claimed to have “funding secured” to take Tesla private, the electric car company he founded. The SEC accused Musk of defrauding investors, leading to the consent decree. Despite his claims that the SEC was conducting harassing investigations into his Twitter usage (he now owns Twitter, which he renamed X), the 2nd U.S. Circuit of Appeals in Manhattan upheld the decree.
Musk’s legal team sought to have the case revisited by either the three-judge panel or all 13 active judges, but the appeals court denied the request. Now, Musk intends to take the matter to the Supreme Court to challenge the SEC’s authority and the constitutionality of the “gag rule” imposed as part of the settlement.
The consent decree involved a settlement where both Musk and Tesla paid $20 million fines, and Musk relinquished his position as Tesla’s chairman. Furthermore, he agreed to have a Tesla lawyer approve some of his tweets in advance.
The appeals court panel had earlier stated that Musk could not revisit the tweet screening because he had “changed his mind.” However, Musk’s legal team argued that the SEC had no right to impose an unconstitutional restriction on his speech as a condition of the settlement.
Interestingly, the federal appeals court in New Orleans also decided to reconsider its previous ruling that Musk violated federal labor law with a tweet he made in May 2018, where he suggested Tesla employees would lose stock options if they joined a union.
The Supreme Court typically hears oral arguments in only a fraction of the cases it reviews each year, making Musk’s appeal an important one to watch.