Elon Musk’s tweets about Tesla Inc. will remain a valid subject for government investigation even if a court throws out his 2018 agreement with the U.S. Securities and Exchange Commission, the agency told a judge.
Musk is seeking to end oversight by the SEC of his Twitter posts, claiming the 2018 agreement is being used to “trample” his free speech rights. He is also asking the court to block a subpoena by the securities regulator for documents relating to the review of his tweets.
The SEC called Musk’s objection to its administrative subpoena frivolous and says his regret over signing consent orders with the agency is no reason to throw them out.
“So long as Musk and Tesla use Musk’s Twitter account to disclose information to investors, the SEC may legitimately investigate matters relating to Tesla’s disclosure controls and procedures, including Musk’s tweets about Tesla, as well as the accuracy of Tesla’s public statements about its controls and procedures,” the SEC said in a court filing in Manhattan federal court Tuesday.
Alex Spiro, a lawyer for Musk, declined to comment on the SEC filing.
The SEC said it has a “legitimate purpose” in investigating whether Tesla has institutional controls over its corporate disclosures and if Musk is complying with them.
The agency is looking into Musk tweets on Nov. 6 in which he promised to sell 10% of his Tesla stock, valued at about $21 billion, if a poll of Twitter users showed they favored of the idea. The regulator also wants to know whether Tesla is accurately reporting its compliance with disclosure policies in regulatory filings.
Musk can’t get out of the agreements “simply because he has found complying with Tesla’s procedures to be less convenient than he had hoped, or because he wishes the SEC would not investigate whether Tesla’s disclosure controls and procedures are actually being maintained and followed,” the agency said. “A deal is a deal.”
As part of the agreements with the SEC, Musk is required to get approval from Tesla’s designated disclosure or securities counsel — informally known as his Twitter Sitter — before communicating material information to investors.
The case is U.S. Securities and Exchange Commission v. Musk, 18-cv-08865, U.S. District Court, Southern District of New York (Manhattan).
(Adds details of dispute in second paragraph.)
To contact the reporter on this story:
Bob Van Voris in federal court in Manhattan at firstname.lastname@example.org
To contact the editors responsible for this story:
Katia Porzecanski at email@example.com
© 2022 Bloomberg L.P. All rights reserved. Used with permission.